POLAND TODAY magazine #06

World Press Photo winner Chris Niedenthal shares his memories of transformation. page 30

Jan Cienski reports from Ukraine on how the country's divisions have made it vulnerable. page 42

A Polish startup that makes 3D printers has landed a huge deal with computer giant Dell. page 54

(06) mar/apr 2014

Climbing higher

Poland looks to build on the past 25 years of economic freedom Poland Transformed

In their own words page 34

How to improve business page 52

PRICE: 25 PLN / 7 EUR

photo: Pixonaut

page 22

Magazine • Portal • Conferences • find out more at www.poland-today.pl

photo: aparatki.pl

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6

table of contents

EDITORial

PROFILE

POLAND TODAY TEAM

The image-fixer

08 10

40

A reputation for competence and efficacy has catapulted Elżbieta Bieńkowska to the top of Polish politics.

GLOBAL MEDIA ROUND-UP

12

INTERNATIONAL

IN FOCUS

Split at the weak points

14-20

The crisis in Ukraine has laid bare the country’s stark divisions.

LEADER

44

Poland Transformed

With Russia flexing its muscle, what happens next in Ukraine will have a huge impact on Poland, experts say.

24

Jan Cienski explains how in 25 years Poland has gone from a ‘fish soup’ economy to a ‘new golden age’. There were three keys: economic and political freedom, increased security, and EU funds.

30

Eyewitness: The Polish transformation

Since 1973, photojournalist Chris Niedenthal has been documenting Poland’s transformation through images. He shares his stories and some of his best-known photographs.

Table of contents

42

34

In their own words

The chaos next door BUSINESS

46

Business round-up

A comprehensive overview of the most important recent events in Polish business and economic news.

50

The pension hole

Poland’s 1999 retirement reform was a costly experiment. A solution to how pensions will be funded in the future remains to be found.

52

A recipe for doing business better The World Bank’s head for Poland and the Baltic States Xavier Devictor tells Poland Today editor Andrew Kureth what Poland needs to change to make a leap in competitiveness.

54

Poland’s future in 3D

The sky is the limit for Polish 3D printer firm Zortrax thanks to huge order from Dell.

56

Chambers of commerce

Poland Today presents a round-up of news and events from various chambers of commerce in Poland.

SPECIAL FOCUS ON REAL ESTATE FOR MIPIM

57-80

Poland Today presents a special section on the opportunities and challenges in Poland’s real estate market for the MIPIM real estate fair in Cannes, France. One thing is clear: Poland is seeing renewed investment interest, and not only from the traditional sources (p. 58).

Indeed, last year commercial transactions in the country reached over €3bn, the best year since 2006 (p. 66). There are challenges, however. The redevelopment of historical buildings – of which there are many – require close cooperation with city officials (p. 72) and land claims are hindering investment in Warsaw (p. 76).

We asked average Poles how the events of 1989, membership in the EU and accession to NATO have affected their lives.

38

Poland Transformed: An executive conference from Poland Today

On 3 April we will bring key figures from the domestic and international business community, as well as 50 leading foreign journalists to discover what the past has to teach us about the future.

Sopot: not just for summer anymore? page 82

Poland’s best Winter Olympics ever page 88

In their own words page 34

82

Sopot coming out of its summer shell

Officials and tourism industry players are pushing to make the city a year-round travel destination.

84

Łódź r(evital)ising

Poland’s former industrial powerhouse is looking to build a sustainable future. Redevelopment projects – including the construction of an entirely new downtown area – are set to change the face of the central Polish city.

90

A foreigner’s effort to get away from it all put him up against Poland’s post-communist bureaucracy and culture.

HISTORY

92

It happened in... March

Though less glamorous than the first free elections and not as immediately visible as EU membership, entering NATO offered Poland a new level of security that was key in allowing its fledgling democracy to develop.

CONVERSATION

Improved infrastructure is boosting Poland’s largest eastern city.

Impressions of Poland

SPORT

88

94

Poland Today sits down with foreigners living in Poland who have unique perspectives.

This time, Kehrt Reyher, an expat from the United States, gives his take on some of his first impressions in Poland, how those impressions changed, and how the country changed him.

Poland’s golden winter

The 2014 Winter Olympics in Sochi were an unprecedented success for Poland. Having won only two gold medals between 1924 and 2010, the Poles returned from Sochi with double that number. Poles also won a silver and a bronze medal, bringing the total medal haul the country won to six. In all, a record-breaking nine proud Poles stood on the podium.

A divided land, right next door. page 42

table of contents

A lake, a hotel, and a battle for justice

86

Gateway Lublin

7

BOOKS & ARTS

The image-fixer page 40

Poland Today

is an idea whose time has come. Poland is increasingly playing a leading role in Europe – as has been made clear through recent events in Ukraine – and is ever more visible and respected on the world stage.

The significance of the English language will only grow when it comes to business in the country, especially as Polish companies seek more markets for their expansion abroad and as more foreign investment comes in. The Englishlanguage media in Poland so far have not adequately reflected the country’s growing dynamism and ambition, which is one of the reasons we started Poland Today in 2012. We wanted to create an English-language platform – through our magazine, events, website and social media – which would, as our mission statement has it, “bring Poland to the world and the world to Poland”. This year we are organizing several events around Poland where people can make important contacts for their business and share knowledge and new ideas. We will involve international chambers of commerce and embassies in these events. We are proud that the Deputy Prime Minister, Elżbieta Bieńkowska, will be speaking at the 2nd edition of our Primetime Warsaw conference in April, and we’re excited by the prospect of bringing 50 foreign journalists – including the senior editor of The Economist, Edward Lucas - to Warsaw in May for our ‘Poland Transformed’ conference. This conference will focus on the dramatic success of the country over the last quarter century, seen through a business lens, and will discuss how this success can be further built upon, emphasizing the importance of R&D and innovation in education and business.

We want to do our part to help Poland reach its full potential; we want to make it easier for investors doing business in this country, and we want to help promote a better, more up-to-date, image of Poland abroad.

It's an exciting new start

Richard Stephens,

Founder & Editor in Chief

Publisher’s note

EVENT REVIEW

8

editorial

‘If there is any doubt as to just how successful the changes have been, just look across Poland’s western and eastern borders.’

Poland Today Sp. z o. o.

ul. Złota 61 lok. 100, 00–819 Warsaw, Poland tel/fax: +48 224648269 mobile: +48 694922898, +48 505006606 www.poland-today.pl

Andrew Kureth is

Editor’s note

editor of Poland Today. Originally from the United States, Andrew has been reporting on Poland for 10 years, specialising in topics ­related to business and ­economics. He has written for numerous international publications, including the Financial Times. He was editor in chief of Warsaw Business Journal for seven years. He has a degree in English from Kenyon College in Ohio.

It’s not an exaggeration to call Poland’s transformation one of the world’s best comeback stories. If there is any doubt as to just how successful the changes have been, just look across Poland’s western and eastern borders. Across the Oder River, to the west, is a reminder of Poland’s ambitions: Germany, the world’s fourth-largest economy, boasts the development levels that Poland would like to attain. Across the Bug, to the east, Ukraine’s fledgling government hangs on by a thread. A protest movement turned insurgency eventually pushed the country’s reviled president to flee – angering populations in pro-Russian regions like Crimea. Russia has now flexed its muscle and other eastern provinces are considering d ­ eclaring independence from the central government. (see pages 42-45).

That is the present that Poland has avoided. Back in the 1980s, there wasn’t much difference in terms of development between the two countries, but history led them on different trajectories. Poland seems to have made the right choices: freedom, security and an open market trading with its European Union partners (see pages 22-28). The result? In 25 years Poland has made up for over 500 years of economic backwardness. Last year, Poland achieved the highest level of income relative to Western Europe since the year 1500.

Lest we forget that the opportunities Poles now enjoy are a relatively recent phenomenon, Chris Niedenthal’s photos (see pages 30-33) provide a reminder of what Polish reality once looked like. The British-Polish photojournalist has been documenting Polish life since 1973, and his images are some of the best-known from martial law and Poland’s transition period. Ordinary Poles also understand the importance of the triple anniversaries that occur this year (those of the first partially free elections, joining NATO and EU accession).

No matter their political or demographic differences, Poles we spoke with all agree that Poland’s transformation has so far been successful (see page 34-36).

Add a rebounding economy and an Olympic team that hauled in six medals at the Sochi games, including a recordbreaking four golds (see pages 88-89), and the general mood – at least prior to the Ukraine crisis – has been upbeat.

Nevertheless, Poland’s transformation story is not finished; there is still much it could do to help its economy take off.

Examples include fostering innovation and making it easier for businesses to operate here. (see pages 52-53).

Here’s to hoping that Poland continues to find ways to unleash the entrepreneurial spirit of its people. It worked in forging a 25-year transformation that is an example for the world. It could do so again in the next 25 years.

Founder & Editor in Chief Financial Director Creative Director Business Development Director Marketing & Communications Director Sales Director New Business Consultant International Client Director Business Strategist Key Account Manager Event Manager Office & Conferences Manager Website Editor

Richard Stephens Arkadiusz Jamski Bartosz Stefaniak James Anderson-Hanney Sylwia Ziemacka Aneta Kłodaś Tomasz Andryszczyk Toby Hancock Ana Hermoso Magda Gawlikowska Marta Borowska Ewa Rycicka Damien Moran

PT magazine Editor Business Editor Real Estate Editor Journalist

Andrew Kureth Lech Kaczanowski Adam Zdrodowski Piotr Narel

Contributing Journalists

Krzysztof Bobiński Jan Cienski Matthew Day Cynthia Naugher Sklodowski Richard Stephens

Photographs

Polska Agencja Fotografów Forum

Art Director Graphic Designer DTP Operator

Bartosz Stefaniak Morgann Lechat Tomasz Wróblewski

Magazine layout

www.bartoszstefaniak.com

Printing house

ArtDruk Zakład Poligraficzny ul. Napoleona 4, 05-230 Kobyłka Poland Today Magazine is printed on Munken Print Cream ecological paper © 2014 Poland Today Magazine reproduction without permission is prohibited

9

10

POland today people

‘We all bring our own strengths and skills to the table in making Poland Today a success’ Marta Borowska, Event Manager.

James Anderson-Hanney, Business Development Director. James brings

Our growth has been rapid at Poland Today. This time

Richard Stephens, Founder & Editor in Chief

a jolt of passion and creativity to the development of Poland Today’s various lines of business. With a Polish wife and four bilingual children, his future is intimately tied to Poland’s.

He’s an unabashed Polonophile.

last year there were three of us working out of an apartment.

We’re still in the apartment, but now we have a team of 21 (not including our contributors), most of whom are full time.

Because this growth has been quicker than we expected, we’ve taken some time out since the last issue of Poland Today was published in September to assimilate the team and to re-assess our objectives. We’ve also produced a major promotional English-language presentation for the Ministry of Foreign Affairs in that time. Our team is young, dynamic and very international – and we feel this is reflected in our publications and conferences. We all bring our own strengths and skills to the table in making Poland Today a success.

My professional background is in real estate publishing and event organizing. Before launching the company, I set up and established the Eurobuild Awards, which were an immediate success and remain so. I’m delighted with the start we’ve made at Poland Today, and very proud of my team for making it possible. I’m grateful to my family and friends for their support, and to the companies that have backed us from the beginning, when we were just a concept.

Tomasz Andryszczyk, New Business ­Consultant. Tomasz

Marta has tried her hand at teaching Spanish and writing about volleyball.

Finally, she joined Poland Today because she wanted to work with talented professionals on a big-impact project.

Her role involves putting together the nuts and bolts of our many events.

is a busy man, dividing his time between his PR agency Primo Corporate Advisory, Poland Today and his family, but his keen understanding of media is invaluable. He was a driving force behind the establishment of our annual Primetime Warsaw conference.

The team

Damien Moran, Website & Social Media Editor. Au-

Our contributors include:

Edward Lucas

The Economist

Jan Cienski

Matthew Day

The Daily Telegraph

Piotr Smolar

The Financial Times

Le Monde

Katya Andrusz

Tadeusz Sobolewski

fmr. The Economist, Bloomberg News

Gazeta Wyborcza

Morgann Lechat, Graphic Designer.

Morgann has worked on graphic design all over Europe, from Amsterdam to Paris to Warsaw. Having been with Poland Today for about a year now, his role includes building the magazine’s graphic narration.

Marzena Lorenc, Business Review+ Project Manager.

With her experience working in Finland and the UK, Marzena’s international perspective puts her in a perfect position to understand the needs of our diverse array of readers and clients.

thor of a best-selling guide to the 2012 European football championships, Damien brings a wide knowledge set and keen writing skills to Poland Today’s online and social media operations. He has also volunteered around the world, from Haiti to Ghana.

Toby Hancock, International Client Director.

Magda Gawlikowska, Key Account Manager. Magda

Toby, an entrepreneur who lives in Spain, has visited Poland on many occasions.

He finds the country vibrant and exciting, so he jumped at the chance to be a part of the management team. He represents the company to international contacts.

Cynthia Naugher Sklodowski, Production Manager & ­International Press Tour Co-ordinator.

was raised in the US and moved to Poland after college to learn more about his native country. He joined Poland Today to indulge his passion for journalism in his primary language.

He enjoys learning languages, cooking, and travelling.

Arek was the first to sign on to the Poland Today project, and did so without hesitation. He loves high-adrenaline endeavours, like sky diving, and that comes in handy in his position as financial director of a start-up media company.

Ana Hermoso, Business Strategist. Ana is a

business and strategy professor with years of experience in the publishing and conference sector. These skills help her fulfil her role in honing Poland Today’s business strategy and advising on the establishment of forthcoming publications and events.

is a globetrotter and a woman of many talents: she plays the saxophone and has been a member of Poland’s sport shooting Olympic Team.

It’s little surprise then that she brings enthusiasm and open-mindedness to Poland Today’s sales team.

Piotr Narel, Journalist. Piotr

Arek Jamski, ­Financial Director.

Cynthia has worked in media from Texas to New York City, at the magazines Cosmopolitan and Seventeen, but also in advertising. She has lived in Poland for four years with her Polish husband and young son.

Ewa Rycicka, Office & Conferences Manager. With

an educational background in philosophy and logic, Ewa brings her impressive organisational and interpersonal skills to bear as the manager of the company’s dayto-day operations and as a coordinator of business events. She is an avid traveller and follower of online media trends.

Lech Kaczanowski, Business Review+ Editor. Lech has

degrees in sociology and journalism, and was a Soros Foundation Fellow at Duke University in the US. With 12 years of experience covering Polish business, his depth of knowledge provides the insight that subscribers of Business Review+ find so valuable.

Andrew Kureth, Editor. Andrew is a

dedicated and experienced journalist with a reputation for organisation and goaloriented thinking.

He came to us from Warsaw Business Journal, where as editor in chief he provided quality content on a weekly deadline for seven years.

Aneta Kłodaś, Sales Director.

Aneta brings a whole new dimension to the company: a successful and established series of regional and city events under the ‘Prospects in Poland’ brand. Her drive and focus have helped us achieve excellent sales results from day one.

Bartosz Stefaniak, Creative Director.

Bartosz joined Poland Today at its inception, and his artistic vision gave instant credibility to the firm’s products. From the ground-up design of the magazine to his work on ads and custom projects, his sharp, powerful, award-winning work speaks for itself.

Tomasz Wróblewski, DTP operator.

Tomasz has a degree in biology, but his real passions are sports, photography and design. He has combined all of these interests in his professional life, first while serving as editor of a skiing magazine and now at Poland Today.

‘We all bring our own strengths and skills to making Poland Today a success.’

Sylwia Ziemacka, Marketing & Communications Director. Sylwia’s years

of work in PR and advertising allowed her to develop communication strategies for many Polish and international brands.

With Poland Today she has decided to use her experience and passion to promote Poland and build its reputation globally.

Adam Zdrodowski, Real Estate Editor.

Adam, an experienced real estate journalist, knows Poland’s development map like the back of his hand. He is editor of the property section of the magazine and the PT Urban Issues weekly digital newspaper.

12

global news round-up

Americas

Asia and Pacific

Europe

The New York Times: The Polish church’s gender problem

The Japan Times: Married for 50 years – Poland says you deserve a medal

The Telegraph: Ukraine crisis: Poland’s foreign minister tweets his way to a peace deal

Leftist Polish thinker Sławomir Sierakowski opined on how the word “gender” has come to dominate Polish political debate in an op-ed for The New York Times. Sierakowski decries statements by church officials such as, “the ideology of gender presents a threat worse than Nazism and Communism combined.” He points out that since the fall of communism, Gender Studies programmes have been established at most Polish universities and several feminist and LGBT movements have formed in Poland.

by Piotr Narel

The unusual Polish tradition of rewarding couples for being married 50 years with presidential medals was picked up in The Japan Times.

It ran a story entitled “Married for 50 years – Poland says you deserve a medal.” According to the report, originally from AFP, the tradition is unique to Poland and is a product of a conservative backlash to communist-era policies that led to more women in the workforce and fewer marriages. The tradition began in 1960.

Sydney Morning Herald: Rare white lion triplets born in Poland

An Associated Press feature on the birth of white lion triplets at a private zoo in Borysew, central Poland, made headlines worldwide, including in Australia’s Sydney Morning Herald.

According to the report, only about 90 African lions worldwide carry the rare colour mutation, including the parents of the recently-born triplets. The private zoo owner is said to feel “three times lucky” with the birth of the white cubs.

The Australian: Australian teens fall behind peers in Vietnam, Estonia and Poland The Washington Post: The hidden history of the CIA’s prison in Poland

The Washington Post recently featured an in-depth report about a former prison allegedly used as an interrogation centre for high-profile al-Qaeda suspects in Stare Kiejkuty, Poland, by the CIA. The report was widely circulated in the US. US Deputy National Security Adviser Ben Rhodes responded to the interest generated by the article: “I would not like to comment on what is happening in Poland.

This is something that concerns the Polish government and Polish justice.”

Australian students are trailing those in Vietnam, Poland and Estonia, laments The Australian. It is not clear as to why Poland and the two other countries were specifically mentioned out of the list of well over a dozen countries ahead of Australia in the rankings. For several years Poland’s education system has scored highly in OECD rankings.

photos: Dawid Lasociński (Forum), Bogdan Hrywniak (Forum)

Global news round-up

CNBC.com: Poland and Romania are Europe’s ‘rising stars’

A 2000-2012 study by PwC measuring economic and social progress called Poland and Romania “rising stars” in terms of economic and social progress. CNBC picked up on the study, noting that Poland had risen six places between 2012 and 2000 and was the only EU country to avoid a recession in 2009.

SurferToday.com: Riding the Baltic Sea swell in the coastline of Poland

Poland’s coastline, measuring some 491 kilometres along the Baltic Sea, is one of the most unique surfing destinations in Central Europe, according to Portuguese website SurferToday. com. The report mentions that Poland has about 2,000 regular surfers and “the local surfing scene is growing rapidly.” Fast-moving waves in low-salt waters are offset by long waits for the appropriate winds. The main surfing spots are said to be in Pomerania and, for kiteboarders and windsurfers, the Hel Peninsula.

Middle East

Jerusalem Post: Jewish garb is cool in Poland

Warsaw-based clothing brand “Risk. Made in Warsaw” is “out to prove that being Jewish is cool and sexy” with its “Risk Oy” fashion line, according to The Jerusalem Post. “In a country where close to 75 years ago, Jews were forced to wear the yellow star that set them apart from non-Jews, both Jews and non-Jews now think it is hip to sport garments bearing Jewish symbols, along with Hebrew or Yiddish words or Jewish expressions,” reads the report.

Haaretz: Poland shows Israeli tourists all it has to offer

The Wall Street Journal: South Korea had the most last-place finishes in Sochi

After South Korea, Canada and the United States, Poland had the fourth largest number of Olympians finishing in the bottom three spots, The Wall Street Journal noted. The newspaper awarded Poland 2 lead (last place), 5 tin (second-to-last), and 7 zinc (third-to-last) medals in addition to the country’s 4 gold, 1 silver, and 1 bronze medals. The author writes, “Since the US and Canada have large Olympic delegations, it isn’t entirely surprising to see such large pools of Olympians finish all over the field of the competition. ... Poland has no such excuse.”

Polish Foreign Minister Radosław Sikorski’s habit of posting informative tweets on his Twitter account received mention in the UK’s The Telegraph in relation to the ongoing crisis in Ukraine. The foreign minister’s notable tweets have made headlines before, as in September 2013 when he took credit for a Syria peace plan with the post, “Pleased that Russia has taken up Poland’s suggestion of her role in dismantling Syria’s chemical weapons arsenal.”

According to Israeli newspaper Haaretz, tourists from the country are increasingly interested in Poland for reasons other than remembering the Holocaust. Haaretz cited statistics from an official at the Polish embassy in Tel Aviv which show that 80,000 Israelis visited Poland in 2013 – 10,000 more than two years prior. About a quarter of these were said to be “Israeli high school students on ‘Jewish legacy’ visits that include the death camps.”

Hurriyet: Turkey’s Syria, Poland’s Ukraine DNA: Big is beautiful in Poland

DNA (which stands for Daily News & Analysis), a Mumbai-based broadsheet, extolled mural street art in Poland. The report notes Poland “has seen a massive revolution where street art is concerned.” Many artists receive projects commissioned by city authorities and “huge murals and artworks are now a part of the landscapes in many cities of the country,” the author writes. Polish artists named in the article include Przemysław Blejzyk, Mateusz Gapski and Natalia Rak.

2014 marks the 600-year anniversary of diplomatic relations between Turkey and Poland, notes Turkish newspaper Hurriyet. The daily points to the similar present-day concerns of the countries due to conflicts at their borders in Ukraine and Syria, and notes Russia’s role in both conflicts. It also points to the countries’ good historical relations. “The Ottoman Empire refused to acknowledge the partitions of Poland at the end of the 18th century, while Poland was among the first countries to recognize the Republic of Turkey as a state. Turkey was among the countries supporting Poland’s entry into NATO, while Poland openly supports Turkish accession to the EU.”

Europe

The Telegraph: Ukraine crisis: Poland’s foreign minister tweets his way to a peace deal

Polish Foreign Minister Radosław Sikorski’s habit of posting informative tweets on his Twitter account received mention in the UK’s The Telegraph in relation to the ongoing crisis in Ukraine. The foreign minister’s notable tweets have made headlines before, as in September 2013 when he took credit for a Syria peace plan with the post, “Pleased that Russia has taken up Poland’s suggestion of her role in dismantling Syria’s chemical weapons arsenal.”

SurferToday.com: Riding the Baltic Sea swell in the coastline of Poland

Poland’s coastline, measuring some 491 kilometres along the Baltic Sea, is one of the most unique surfing destinations in Central Europe, according to Portuguese website SurferToday. com. The report mentions that Poland has about 2,000 regular surfers and “the local surfing scene is growing rapidly.” Fast-moving waves in low-salt waters are offset by long waits for the appropriate winds. The main surfing spots are said to be in Pomerania and, for kiteboarders and windsurfers, the Hel Peninsula.

Middle East

Jerusalem Post: Jewish garb is cool in Poland

Warsaw-based clothing brand “Risk. Made in Warsaw” is “out to prove that being Jewish is cool and sexy” with its “Risk Oy” fashion line, according to The Jerusalem Post. “In a country where close to 75 years ago, Jews were forced to wear the yellow star that set them apart from non-Jews, both Jews and non-Jews now think it is hip to sport garments bearing Jewish symbols, along with Hebrew or Yiddish words or Jewish expressions,” reads the report.

Haaretz: Poland shows Israeli tourists all it has to offer

According to Israeli newspaper Haaretz, tourists from the country are increasingly interested in Poland for reasons other than remembering the Holocaust. Haaretz cited statistics from an official at the Polish embassy in Tel Aviv which show that 80,000 Israelis visited Poland in 2013 – 10,000 more than two years prior. About a quarter of these were said to be “Israeli high school students on ‘Jewish legacy’ visits that include the death camps.”

Hurriyet: Turkey’s Syria, Poland’s Ukraine

2014 marks the 600-year anniversary of diplomatic relations between Turkey and Poland, notes Turkish newspaper Hurriyet. The daily points to the similar present-day concerns of the countries due to conflicts at their borders in Ukraine and Syria, and notes Russia’s role in both conflicts. It also points to the countries’ good historical relations. “The Ottoman Empire refused to acknowledge the partitions of Poland at the end of the 18th century, while Poland was among the first countries to recognize the Republic of Turkey as a state. Turkey was among the countries supporting Poland’s entry into NATO, while Poland openly supports Turkish accession to the EU.”

14

IN FOCUS

21 February 2014, Radosław Sikorski, Poland's minister of foreign affairs,

had some strong words for a Ukrainian opposition leader during talks on a potential agreement with the Yanukovych government. Apparently, the opposition was reluctant to accept the deal, but Sikorski warned in the strongest terms that the agreement under negotiation was the best option.

Both agreed to the deal, which quickly led to the downfall of the Yanukovych regime. Sikorski was roundly praised for the role he played in brokering the deal.

Photo:

Snapshot

from footage by www.itv.com

photo: Wojciech Artyniew (Forum), Krzysztof Kuczyk (Forum), Lucy Nicholson (Reuters), Mitchell Layton zumapress.com, music 2020

Rafał Blechacz

In 2005, 20-year-old Polish classical pianist Rafał Blechacz won all five first prizes at the 15th International Frederick Chopin Piano Competition in Warsaw.

His victory was so decisive that the competition’s judges decided not to even award a prize for second place. For several years thereafter, unbeknownst to him, Blechacz was also dazzling a panel of anonymous judges responsible for administering the highly prestigious Gilmore Artist Award. Now 28 years old, Blechacz was informed that he would receive the $300,000 award in January.

The award is granted every four years in a secret selection process to an artist deemed worthy of a successful career. Blechacz intends to use his award money to foster his career, either through a new piano or a recording deal with a major orchestra.

People

Grażyna Kulczyk

Thanks to Polish businesswoman Grażyna Kulczyk’s extensive art collection and her inroads in the international art scene, the largest display of contemporary Polish art in recent memory went on display at the prestigious Santander Art Gallery in Madrid 15 February. The exhibition is entitled “Everybody is Nobody for Somebody.”

Besides marketing the contemporary Polish art scene to the world, she also helped establish the Kulczyk Foundation along with her daughter and former husband just a few days before the opening of the exhibition.

Grażyna Kulczyk’s former husband is Poland’s wealthiest man, Jan Kulczyk.

She herself was ranked as the 12th wealthiest Pole according to the Polish edition of Forbes in 2013.

Marcin Gortat

Marcin Gortat is the only Polish player in the National Basketball Association (NBA). Standing at 211 cm (6 ft 11 in) tall and weighing in at 109 kilograms (240 lbs), he has played centre for the Washington Wizards since being traded from the Phoenix Suns last year.

Gortat began his basketball career with ŁKS Łódź before moving to Germany’s RheinEnergie Cologne. His first team in the NBA was the Orlando Magic, and with that team in 2009 he became the first Pole to ever play in an NBA Championship Series. In 2013, Gortat was the highest-paid Polish athlete, having earned more than 22m zł.

Włodek Pawlik

Włodek Pawlik, a Polish composer and jazz pianist, won the 2014 Grammy for Best Large Jazz Ensemble in Los Angeles on 26 January for his album “Night in Calisia”. It marked the first time a Polish jazz musician had ever been awarded a Grammy. In his acceptance speech Pawlik said, “I have received an award in the nation of jazz.

I’m not going to hide it, I am very happy.”

He stressed that the “entire production of this album was in Poland.

This is a Polish product, and, as it turns out – an export product.” The title “Night in Calisia” refers to Pawlik’s hometown of Kalisz. The composer worked with the Kalisz Philharmonic to create the album for a ceremony celebrating 1,850 years since the city’s founding.

Since winning the award, Pawlik claims that sales of the album have rocketed in both Europe and the US.

Ewa Chodakowska

Alicja Chybicka

Alicja Chybicka is a Polish physician, professor at Wrocław Medical University, the head of the Polish Paediatric Society, the head of the Polish Oncological and Haematological Society for Children, board member of several charity organisations and, to top it all off, a senator with the Civic Platform (PO) party. In January, the 62-year-old took part in a week-long charity expedition to the top of Mount Kilimanjaro, Africa’s largest mountain.

“Last year, I completed two half marathons and a marathon. But they were nothing compared to ascending Kilimanjaro,” she said of the 5,985metre ascent. With her long list of accomplishments, it’s worth watching what this doctor-politician-athlete plans to do next.

Ewa Chodakowska’s fitness training videos made her the most famous personal trainer in Poland when fans took her exercise routines from her DVDs and put them on YouTube, eager to share the inspirational videos with others. Since then, Chodakowska has been busy taking advantage of her newfound fame. She hosts her own show on the private television network TVN and is a popular author, reaching the second spot in Polish bookstore chain Empik’s 2013 best-seller list. She was honoured at a gala in February for that achievement.

Though it is often said that Chodakowska “trains all of Poland,” her latest project is a small fitness studio limited to 50 people which will surely play host to countless celebrities looking to benefit from her characteristically upbeat approach. Chodakowska was listed as the 9th most influential person in Poland in 2013 by Wprost magazine for the way in which she has motivated millions of women to exercise. She was the highest ranked woman on the list.

by Piotr Narel

17

in focus

18

in focus

Infographic: Purchasing power – then and now What the average Polish monthly salary could buy you 40 years ago and today

tea 1973: 140 packs (100 g) 2013: 765 packs (100 g)

ham

butter

1973: 31 kg 2013: 116 kg

1973: 165 sticks (250 g) 2013: 652 sticks (250 g)

The average net monthly salary

chicken

in 2013 was 2,800 zł, (~$900), nominally equal to the average salary in Poland in 1973 (~$35 at that time). This allows a comparison on how Poles’ purchasing power has changed over the last 40 years. (source: Central Statistical Office)

illustrations by Jagna Wróblewska

1973: 52 kg 2013: 393 kg

bread

public transport

flour

1973: 700 kg 2013: 622 kg

1973: 2,800 tickets 2013: 1,138 tickets

1973: 418 kg 2013: 1,176 kg

sugar

eggs

1973: 266 kg 2013: 712 kg

1973: 903 eggs 2013: 4,666 eggs

CONFERENCE & COCKTAil PARTy

Primetime Warsaw II

3 April 2014 | Conference Center Muranów | The Museum of the History of Polish Jews, Warsaw

Building on the success of our first conference about Poland's capital, we bring you all the major issues and opportunities, in Central Europe's pre-eminent city. lEAd SPEAKERS:

Keynote: Mrs Elżbieta Bieńkowska,

deputy Prime Minister & Minister of infrastructure and development

Professor Hanna Gronkiewicz-Waltz, Mayor of the City of Warsaw

Professor Sven Bienert,

MRiCS, Professor of Sustainable Real Estate at the University of Regensburg and Uli Sustainability Fellow

single ticket price: 1,150 pln early bird ticket price: 950 pln (till march 17th)

and Social • infrastructural Challenges for Warsaw within

away the ‘green’ • Cutting PR fluff: what are the financial

•

• •

•

patrons

media partner

partners

the new European Funds Perspective 2014-2020 Wola & Praga: two of Warsaw’s most dynamic districts, soon to be joined by the 2nd metro line The art of Placemaking: creating attractive public spaces in and around commercial properties

results and implications of sustainable development?

Trends & issues in the office and retail sectors Can Warsaw come up with a comprehensive ‘high street retail’ plan?

organizing partner

photo: Krzysztof Freszel

to register please call +48 602 224 390 or email ewa.rycicka@poland-today.pl

20 in focus

Easier process for residence permits

Golden winter:

Poland hauled in six medals at the Sochi 2014 Winter Olympics – its most successful by far. Ski jumper Kamil Stoch, cross-country skier Justyna Kowalczyk and speed skater Zbigniew Bródka brought home a total of four gold medals between them, double the number of golds Poland had earned in all of the previous Winter Games combined.

see page 88

Beginning in May, foreigners interested in settling in Poland will benefit from a new law signed by President Bronisław Komorowski last December which will remove restrictions and ease procedures for those applying for residence and employment permits. The new rules include a measure intended to help students of Polish academic institutions remain in the country following graduWarsaw Shore: ation. Foreigners will save the time and MTV Polska’s new top show hassle of having to attain work and residence permits separately, as the “Warsaw Shore – Ekipa z Warszawy” (“Warsaw Shore – the Crew from process will now be consolidated into Warsaw”), the controversial Polish a single procedure. Additionally, instead equivalent of the popular American of having residency expire immediately reality TV show “Jersey Shore” has upon termination of employment, the become the most popular show on new law provides a one-month grace period whereby a foreigner terminated MTV Polska since the channel’s launch from employment may search for new in 2006, according to Nielsen Audience employment before their residency Measurement. The show concluded in mid-January with an average of about expires. Temporary residencies will now Big cats roamed be granted for three years, rather than prehistoric Poland 187,000 viewers per episode. As with two, and applications to extend resithe US version “Jersey Shore” and dency will no longer need to be sub- Remains of jaguars, leopards, and lions the British “Geordie Shore”, “Warsaw found in southern Poland at an archae- Shore” films eight people’s lives as mitted at least 45 days before expiry.

Also beginning in May, foreigners ological site between Częstochowa and they live together in a flat in Warsaw, will be able to apply to extend their Kraków suggest that animal life in pre- go to work, and participate in frequent residence or visa at any time, even on historic Poland was much more diverse late-night escapades, including excurthe last day of their legal stay in the than previously thought, according sions to well-known Warsaw clubs such country. Foreign students studying at to University of Wrocław researchers. as Platinium and Organza.

Polish academic institutions will now The animal remains date from between Agnieszka Odachowska, combe allowed to actively seek employ- 600,000 and two million years ago. Dr. munications manager with Viacom ment in Poland for a year following Adrian Marciszak from the paleozool- International Media Networks, said their graduation. However, certain ogy department at the University of the success of Warsaw Shore shows obstacles for foreigners will remain. Wrocław said, “The jaguar may have that a local version of a popular MTV Firms interested in employing peo- arrived around two million years ago show “can raise the popularity of ple from outside of the EU will still from Africa and Asia. Leopards and a given programme to new heights.” need to demonstrate that the local job Pleistocene lions lived later – around As with previous versions, the Polish version has been met with stark critimarket is insufficient to fill positions. 600,000 years ago.”

Foreigners applying for temporary The researchers hope to use their cism. Sebastian Łupak from Newsweek residence will need to provide proof of findings to disprove theories which Polska wrote, “A real portrayal of Polish health insurance, detailed employment posit that Poland’s prehistoric climate youth or a desperate attempt at getting information and information on finan- was unfavourable to the development viewers by MTV? One thing is for sure: Warsaw Shore is the most vulgar procial resources to cover living expenses. of animals such as large cats.

A website to help foreigners understand And they were large, indeed: the gramme on Polish television.” Karolina the new law will be launched shortly jaguars, leopards and lions thought to Korwin-Piotrowska from TVN Style have inhabited prehistoric Poland were referred to the show as “mental excreat www.cudzoziemcy.gov.pl. bigger than their present-day coun- ment.” In January, it was announced terparts. Researchers said that some that the Polish version of the show will Pleistocene lions were as big as cows be aired on MTV networks in Germany, and weighed in at half a ton.

Switzerland, the Netherlands, and Scandinavian countries.

by Piotr Narel

1989/2014 Over the past 25 years Poland has wiped out nearly five centuries of decline, going from European backwater to one of the world’s most striking economic success stories. How was this transformation achieved, and what lessons does the country’s story hold for others?

Poland Today examines the country’s formula for success.

Transformation story: 25 years ago,

Poland’s economy was a basket case.

Today, the country is the only EU member to have held off recession since 2008.

Democracy, security, free trade and EU membership were critical factors. see page 24

Historical view:

Experts in history and international relations share their stories about the most remarkable qualities of the 1989 transition, joining NATO and EU accession. Which had the greatest effect on Poland and on their own lives? see page 28

Images of change: British-

Polish photographer Chris Niedenthal chronicled Poland's tumultuous transition period. He shares his memories and his most iconic photos. see page 30

illustration: Bartosz Stefaniak

photo: Aleksander Keplicz (Forum)

Poland transformed In 25 years Poland has gone from a ‘fish soup’ economy to a ‘new golden age’

Poland is one of the most

startling success stories among all emerging markets – a secure and stable democracy that has become a key NATO ally and an important member of the European Union, an economy with flourishing private companies which has not experienced a recession in more than two decades. 2014 marks a decent vantage point to look back on why Poland has succeeded, 25 years after it held partly free elections that led to the formation of the region’s first non-communist government, 15 years after Warsaw joined the Atlantic Alliance, irrevocably breaking free of its old Russian imperial master, and a decade after joining the EU.

Hopeless, bankrupt, collapsing

setting the ground for round table talks in the spring of 1989 that would allow for partly free elections. The communists, deluded by their supposedly all-powerful spy services, thought that they still had reservoirs of support and would win the elections – even Wałęsa doubted the opposition’s ability to rout the communists.

But on 4 June, rout them they did, with the Solidarity-led opposition taking 99 out of 100 seats in the openly contested senate, and all of the 35 percent of seats up for grabs in the more powerful lower house.

The stunned communists did not regain their footing, and on 14 August Tadeusz Mazowiecki formed Poland’s first noncommunist government since the war. It was those heady months that followed that laid the course for Poland’s success over the next quarter century.

A short 25 years ago, Poland was one of the most hopeless places in Europe – a nearly bankrupt state, riven by hyperinflation, with collapsing industries, garrisoned by thousands of Building businesses Soviet troops and led by a communist party that had lost all The first and most crucial reform was in economics. legitimacy. Grimy cities choked under clouds of smog gen- Mazo­wiecki, together with Leszek Balcerowicz, his finance erated by coal used to fuel industry and heat homes. Shops minister, unleashed shock therapy reforms at the beginning carried catchy names like “Bread”, “Shoes” and “Dairy”. of 1990 aimed at rebuilding a market economy – the first such Meanwhile, many well-qualified Polish engineers, scientists attempt in a formerly communist state. Balcerowicz moved and doctors supplemented their pitiful $25-a-month sala- quickly to cut off financial guarantees for state owned comries by working abroad – a month spent panies, banned the central bank from financing the budget deficit, made the picking French grapes, Norwegian strawberries or painting British houses złoty internationally convertible and would earn much more than an annual ended the state’s monopoly on foreign salary back home. trade. Suddenly all the activities that Saddled by an unworkable commuhad been illegal or severely restricted under communism became possible. nist system imposed by Soviet force of arms in 1944, Poland had hit bottom The immediate result was devastaby early 1989. It had always lagged the tion. Heavy industries and collective wealthier western half of the continent, farms were cut off from the loans and even during its golden age in the 16th subsidies that had allowed them to century. However, in 1939, just before continue operating despite producing the outbreak of the war, Poland had nothing of real value. The Gdańsk shipinched ahead of Spain, devastated yard, the birthplace of the Solidarity labour union, was put into receiverby its civil war, and was about half as wealthy on average as Western Europe. ship, and has since struggled to survive.

Coal miners, once the shock troops of The bloodbath of the war followed a socialist workforce, lost their exalted by more than four decades of communism left Poland further behind status as the mines were suddenly than ever. By 1989, Poland was only forced to try to make a profit. Hundreds about a third as wealthy as Western of thousands lost their jobs.

Europe – one of the greatest dispariBut amid the ruin, thousands more began to build their businesses. Many ties between it and the more advanced half of the continent in centuries. In got their start on the sidewalks of Polish the grim assessment of Adam Michnik, towns and cities, setting up booths sella leading dissident, Poland’s communists had managed ing everything from shoes to sausages. Suddenly, an econto turn the “aquarium” of subtle relationships that govern omy where many had money to spend but little sensible to a market economy into “fish soup”. buy had changed into one where goods were widely available.

But the grim and grey winter of 1988 to 1989 carried signs “We didn’t expect such an explosion of new ­businesses,” that an attempt would be made to turn that soup back into a said Stanisław Gomułka, an economist and one of Balcero­ functioning marine environment. The Polish United Workers wicz’s advisers in the early 1990s. “That first phase of Party had finally realised that it could not push through eco- Polish capitalism was impossible to repeat. We haven’t nomic reforms without giving way politically – something seen such rapid private sector growth in any other ex-comthat had become possible after Mikhail Gorbachev took over munist country.”

Many of the companies which today dominate the counthe USSR in 1985. The communists put out feelers to the still-banned Solidarity labour union headed by Lech Wałęsa, try got their start during those turbulent early months of

‘That first phase of Polish capitalism was impossible to repeat.

We haven’t seen such rapid private sector growth in any other ex-communist country.’

25 leader

Jan Cienski is

the Warsaw and Prague correspondent for the Financial Times. He has been in Warsaw since 2003. Prior to that he spent five years as the Washington correspondent for the National Post, a Canadian newspaper. He also spent several years in the US working for the Associated Press.

From 1992 to 1995 he worked in Moscow for the German News Agency DPA. Jan has a degree in international relations from the University of Toronto.

26 leader

On the previous spread: In one of the

most iconic moments of the transformation, Tadeusz Mazowiecki, Poland’s first freely elected prime minister, stood in Parliament and gave the victory sign after the country’s first non-communist government was officially formed on 14 August 1989. The people's ‘victory’ over communist rule had finally been achieved.

Belarus:

Bulgaria:

Czech Republic:

Hungary:

Latvia:

Lithuania:

+292%

+193%

+391%

+296%

+401%

+399%

1990: $1,705 2012: $6,685

1990: $2,377 2012: $6,978

1990: $3,787 2012: $18,608

1990: $3,186 2012: $12,622

1990: $2,796 2012: $14,008

1990: $2,841 2012: $14,183

nominal GDP per capita change 1990-2012

nominal GDP per capita change 1990-2012

transformation. Leszek Czarnecki, running a diving business in his native city of Wrocław, saw that new companies were going to have to get their hands on expensive equipment like cars and trucks they could not afford to buy outright. He opened one of the country’s first leasing businesses, sold in 2001 to France’s Credit Agricole for 900m zł, and today he runs one of the country’s leading banks.

Czarnecki recalls that anyone who had the guts to break with the comfort and security of a state sector job in the early 1990s “was guaranteed to succeed.”

Dariusz Miłek, a bicycle racer, ditched sweating out wins on the European circuit for buying goods on Vienna’s Mexikoplatz and then selling them on in his native Lubin, Poland’s copper mining capital in the west of the country.

He now owns one of the region’s largest shoe retailers and is worth about $1bn.

The foundations for that explosion of private enterprise were set by the government, which laid the basic rules under Balcerowicz, and then quickly built up a functioning and conservatively regulated stock exchange. The first trades on the Warsaw Exchange took place in April 1991 on the top floor of the old Communist Party central committee building – the only place in Warsaw with proper computers available to handle that day’s $2,000 in trades.

nominal GDP per capita change 1990-2012

nominal GDP per capita change 1990-2012

‘In just about twenty years [Poland has offset] more than 500 years of economic decline, a historically unprecedented achievement.’

nominal GDP per capita change 1990-2012

nominal GDP per capita change 1990-2012

The initial explosion of entrepreneurialism, harnessed to tight trading links with Germany, and buttressed by a sensible fiscal and monetary policy, have made Poland the only European country to dodge an outright recession for more than two decades.

Marcin Piatkowski, an economist with the World Bank, spells out the scale of Poland’s economic success in a new paper entitled, “Poland’s New Golden Age”.

“Poland has achieved levels of income, quality of life, and well-being never experienced before,” he wrote.

“This year [2013], its GDP per capita will reach 62 percent of the level of income in the developed countries of Western Europe (euro-area 17), Poland’s natural benchmark and an objective of social aspirations, up from below 30 percent in 1992. It will also achieve the highest level of income relative to Western Europe since the year 1500, thus in just about twenty 'SHOCK THERAPY' years offsetting more than 500 years of economic decline, a historically The biggest driver behind Poland’s market unprecedented achievement.” reforms was the Balcerowicz Plan, also dubbed Economic growth has been closely “Shock Therapy”, which was designed by a commission of economists led by Leszek Balcetied to political and strategic securowicz, Poland’s finance minister at the time. rity. Unlike Slovakia, which dabbled with the authoritarian Vladimir Meciar The plan included legislation in 1989 that hit at the heart of special preferences for statebefore finally opting in 1998 for owned companies. It abolished preferential a European direction, and the former laws on loans for state-owned firms and limited Soviet republics to its east which have their wage increases. It also introduced fair been unable to build conventional play: taxation for all companies was standardized, and firms could not be additionally taxed democracies, Poland shied away from simply by the decision of a government bureaupolitical radicalism. crat. The laws allowed both private citizens and ‘New golden age’ Voters in 1990 rejected the populist foreign-based companies to invest in Poland Unlike Czechs, Slovaks and Russians, and export their profits abroad. It abolished the overtures of enigmatic businessman who tried out faddish “voucher pri- state monopoly on international trade and creStan Tymiński, instead choosing Lech vatisation” schemes that gave citi- ated a uniform customs rate for all companies.

Wałęsa as the country’s first demoWhile the plan was effective in quickly ending zens a stake in the economy built up cratic president since the war. state control of the economy and allowing under communism, and which quickly private business to flourish, many state-owned Governments formed both by became a hunting ground for the cor- firms failed, and over 20% of the population the ex-communist left and by parrupt and well-connected to steal most was left unemployed. ties descended from Solidarity folof those assets, the conservative Poles lowed a similar path – pushing Poland sold many of their industries, from teletowards the West by joining every communications to three-quarters of banks, to foreign inves- significant institution, often in the face of an initial lack of tors, who provided the capital and know-how to modernise. enthusiasm from Western Europe.

Some, like Jan Kulczyk, today the wealthiest Pole, capi“We have become a valued partner, a country talised on their deep contacts with the old regime, as well whose opinion is requested, whose counsel is sought,” as access to capital denied most new business startups, Radosław Sikorski, the foreign minister, told parliament to act as go-betweens during large privatisations, and in recently. Poland and two of its neighbours joined NATO the process built fortunes of their own. But Poland avoided in 1999, cementing Poland to the Western alliance after the creation of true oligarchs, as in Russia and Ukraine, and a decade spent in an uneasy no-man’s-land between even to some extent in the Czech Republic and Slovakia, Western Europe and Russia.

The wisdom of that move becomes more apparent every and the richest Poles have only a limited influence on year as a revived Russia pours more money into rebuilding the country’s politics.

Romania:

Poland:

+650%

+447%

nominal GDP per capita change 1990-2012

nominal GDP per capita change 1990-2012

1990: $1,694 2012: $12,708

1990: $1,651 2012: $9,036

All data in current prices (source: World Bank)

Russia:

+302%

nominal GDP per capita change 1990-2012

1990: $3,485 2012: $14,037

Slovakia:

+658%

nominal GDP per capita change 1990-2012

1990: $2,221 2012: $16,847

Ukraine:

+146%

nominal GDP per capita change 1990-2012

1990: $1,570 2012: $3,867

its military, but is unable to exert the kind of pressure on Poland that it can against weaker neighbours like Belarus and Ukraine.

European largesse Even more crucially, Poland joined the European Union a decade ago. The adoption of EU legal and regulatory norms ensured that the country was seen as a stable place in which to do business and helped draw in billions in foreign investment. Billions more came in the form of EU agricultural and structural funds. Projects that Poland was unable to finance itself, ranging from sewerage plants for dozens of towns, to upgraded rail networks, better hospitals and the construction of thousands of kilometres of new highways have modernised the country.

“What we have been able to accomplish over the last nine years thanks to the EU’s help would have taken us 30 years if we had to do it on our own,” Elżbieta Bieńkowska, the minister in charge of spending Brussels’ largesse, told the Gazeta Wyborcza newspaper. “Everything that has happened in Poland over the last few years has an element of Union money.”

The government has now launched ambitious plans to spend the €106bn it will receive during the current EU budget cycle. That money will be used to propel Poland into the front ranks of EU countries, with the eventual goal of finally ending its long run as a catch-up country.

Challenges ahead

The Balcerowicz Plan, named after

$64bn (1990)

$489bn (2012)

1990-2012 nominal GDP comparison in current prices. Poland is currently the largest

economy in Central Europe, the 6th largest in the EU and, depending on the measurement, 19th to 21st largest in the world.

Finance Minister Leszek Balcerowicz, was the first ever attempt to switch an economy from a communist system to a free market.

No country had ever attempted it, and success was by no means guaranteed.

Although the immediate social costs were huge, today Poland has emerged as the most successful of the European post-communist economies. It was the only EU state which avoided recession during the global financial crisis.

However, the challenges are going to become more difficult. For the last 25 years, Poland has grown largely thanks to having a cheap but well-educated workforce combined with easily available technology.

Local businesses have piggy-backed on technology and business approaches in more advanced economies – visible in everything from bicycle and bus production lines to the dozens of factories churning out car parts destined for German factories. Even retail models, ranging from hypermarkets to knock-offs of Starbucks-like coffee chains have been transposed to Poland with enormous success.

The problem now is that many of those easy gains have been used up, and Poland is now going to have to undertake the much more expensive and difficult task of actually creating innovations instead of borrowing from richer neighbours.

But it is not going to be easy to shift from being a copycat country. Poland spends less than 0.8 percent of GDP on research and development, one of the lowest levels in the EU. Local universities do have strong areas like computer programming, but generally are lacklustre compared to better financed rivals in Western Europe and particularly the US. There are some bright spots – schools are now among the best in the EU, and the government is promising to funnel a lot of the coming wave of EU structural funds into innovation.

“Our companies don’t spend money on their own innovative products,” Bieńkowska said in a recent interview.

“They prefer to buy ideas from abroad. We’re going to try to change that way of thinking.” If that happens, then Poland’s next 25 years could prove to be as successful as the last 25. by Jan Cienski

27 leader

28 leader

Dr. Katarzyna Pisarska, director

and founder of the European Academy of Diplomacy

My organisation

Experts on history and diplomacy

share their memories of Poland’s landmark transitional moments: the first partially free elections, joining NATO and EU accession

was founded barely a few months after Poland joined the European Union in the 2004 expansion. Poland’s role on the international stage became much more important and the interest in our history and foreign policy significantly increased among foreigners.

Yet the event that sticks out most clearly in my memory in the last 25 years involves Poland’s accession to NATO in 1999. I was living in the United States in the pre-accession period and I was in contact with the Polish American Community that was vigorously advocating in the US Congress for Poland to join. I remember very clearly when one of these colleagues told me, with a smile on his face, that “Caesar said, ‘It’s done.’ “President Bill Clinton, or “Caesar,” had decided that Poland should join NATO, meaning that Polish entry was a foregone conclusion.

Poland’s development [since 1989] has been positive, though there were, of course, mistakes in the process. Poland should have taken an example from its neighbours in bringing new names into the political system following the transformation. Moreover, apart from those made during the Jerzy Buzek government, none of the significant reforms needed for Poland's economy to thrive have been implemented.

‘[After EU accession] Poland’s role on the international stage became much more important.’

interviewed by Piotr Narel

‘That one wonderful year [1989] ended too soon.’

Dr. Ryszard Zięba, chair of

the Department of History and Theory of International Relations, Institute of International Relations, University of Warsaw

I first began suspecting that largescale talks concerning the future of our country were taking place in the autumn of 1988. I remember attending an event where a representative from the ruling communist party said that the regime did not fear power sharing because the opposition was, after all, an organisation of Poles. The events of 1989 confirmed my suspicions and helped change the course of Poland’s and Europe’s history. It helped ease the unification of Germany, it contributed to the erosion of the Eastern Bloc, and it helped reunify Europe. That one wonderful year ended too soon. Disagreements amongst the political elites hindered development and the world gradually forgot about our role in shaping contemporary European history.

Our greatest successes came later.

Even in 1989, nobody expected Poland to leave the Warsaw Pact and join NATO. Politicians from both sides were convinced that accession to the European Union would come first. Despite this, 80% of society, including the postcommunists, supported entry. However, persuading Westerners was difficult. During one meeting at Columbia University, when I said that Polish entry into NATO was a good deal for both sides, one professor told me with characteristically American frankness that I was “stupid.” Thankfully, enough people were convinced by 1999. Accession to the EU in 2004 was the culmination of Poland’s earlier success with NATO. By being a member of both organisations today, our country no longer needs to sacrifice its development to ensure security. Fate has smiled on our country; we should appreciate it.

Jan Loryś,

director of the Polish Museum of America in Chicago

‘Entry into NATO means that Poland has secure and friendly borders.’

I think that Poland’s entry into NATO is one of the most important political achievements in the last 25 years.

The entry into NATO means that Poland has secure and friendly borders all around. Tensions do exist, but nothing that would ignite a local conflict.

Compare the situation with Poland’s borders after World War I, when conflict and tension existed along all of Poland’s borders. The entry into NATO has also modernized the Polish Armed Forces and increased specialisation. The Polish Air Force flies protective cover for its neighbours who cannot afford the high cost of maintaining their own air forces.

If there is a downside, it is that Poland must curtail its own ambitions as a producer of arms – something which it did during the Second Republic while it was also the second largest economy in the Warsaw Pact. However, turning swords into ploughshares should be a dream sought by us all.

29 leader

30 LEADER

Eyewitness: The Polish transformation Since 1973, photojournalist Chris Niedenthal has been documenting Poland’s transformation through images

Chris Niedenthal

is a British-born photojournalist with Polish heritage who began working in Poland in 1973. He is a World Press Photo prize recipient and is well-known for his photographs of Poland during martial law which he smuggled out of the country under risk of persecution. He became a Polish citizen in 1998.

I was born five years after World Though we were certainly cheering Pope John Paul II War II; my parents had left Poland at for Poland, I did not consider myself greets a crowd of faithful at Jasna Góra the outbreak of war, and ended up in to be an activist. As a journalist I had monastery, CzestoEngland. Despite my name and pass- to appear neutral. My Polish wife had chowa, Poland port, my heart always had a soft spot more leeway in this respect, though in June 1979. for my heritage. Two years after receiv- she was wise enough not to let me ing my first camera, I began travelling in on her connections to the underto Poland regularly from the age of thir- ground. My intentions in Poland had teen. After completing my education, always been to merely document the I made it my home almost acciden- everyday life of the country – sometally. I arrived in 1973, hoping to stay thing which I initially found to be of litfor just a few months, but I have been tle interest to Western audiences. But here ever since. Being here in the early I was lucky to have come when I did.

1970s prepared me well for what were The election of the Polish Pope and the to be extraordinary years that followed subsequent implementation of marsome time later. tial law in 1981 resulted in everyday life It was quite a convenient time to be becoming filled with curious absurdiin the country as a British-born photo- ties. In hindsight, I can clearly see that journalist with increasingly fluent Polish I had remarkable fortune in being in the and Western colour film for my camera. right place at the right time, but on the My first great opportunity came in the night of 12-13 December 1981, I rememform of the election of Pope John Paul II ber also being annoyed that I wouldn’t and his subsequent 1979 pilgrimage to get to sleep in on Sunday after a late Poland. This was followed by the strike night out with friends. at the Lenin Shipyard in Gdańsk led by Lech Wałęsa, whom I was to meet and The success of failure see in action several days before other I am not a war photographer. During foreign correspondents arrived. Then martial law, I continued my work in the came martial law, which is when I was same way as I had done previously. The able to take many of my most famous difference was that I was now docuphotographs. menting a different kind of Poland and The life of a foreign correspondent the stakes were higher. This meant that in Poland during communism was not the task of getting material out of the easy, not only because I had to wait in country became even more difficult. long lines at the grocery store. Though I could not take the material out myself they probably had instructions not to because, unlike most people who were cause us physical harm, the authorities trying to get out, I feared that I would An armoured knew all the foreign correspondents by not be able to return. A good Samaritan personnel carrier stands in front of the name and sight and would frequently in the form of a German student travMoscow cinema in hassle us when they saw us working elling home helped me smuggle out Warsaw in the first the streets during protests and dem- my most well-known and widely rec- days of martial law. onstrations. Most of the time, this was ognised photograph, which depicted The film showing at the time was Franlimited to checking our documents and an armoured personnel carrier in front cis Ford Coppola's telling us to get out of the area. On a of the former Moscow Cinema (Kino “Apocalypse Now”. few occasions, it consisted of a typical Moskwa) playing “Apocalypse Now”.

Warsaw, December good-cop/bad-cop interrogation at a I recruited him simply by going to 1981. militia station which would last for sev- the train station and desperately lookeral hours. Interestingly, the authorities ing for someone who was leaving for kept very detailed records of our activi- West Germany. After finding him at the ties, which I had a chance to see two very last moment, I gave him my films decades later. One somewhat humor- and asked him if he would be willing ous, though probably true, character to call the Newsweek office in Bonn report described me as someone who, once he arrived in Germany. Once he in the presence of his wife, appeared did this, they immediately sent a motorto have nothing to say. The paranoid cycle courier halfway across the counimplication here was that as the domi- try to pick up the undeveloped film. nant one in our relationship, my wife, At the time, I had no idea how famous would likely be the one bold enough to the photograph would become. As for become an activist behind the scenes. the German student, I doubt he ever

‘Germans often receive undue credit for the transformation in Europe, when it was actually Poland where it all began.’

photo: Chris Niedenthal (Forum)

Solidarity leader Lech Wałęsa

with photographer Chris Niedenthal, photographed on 5 October 1983, the day that Wałęsa received news that he had just won the Nobel Peace Prize.

Photographed by a lake near Gdańsk where Wałęsa was out fishing.

32 LEADER

realised what he had helped accomplish. If only I had noted down his details I would now be much happier – I have been wanting to thank him personally for the last 30-odd years!

The one and a half years when martial law was in force in Poland was a time of hardship – and hardship brings out the best in people. During martial law, Poles were motivated and full of purpose. They thirstily devoured knowledge any way they could. They banded together. It was inspiring and impressive to meet so many people who managed to remain so determined under such austere conditions. Even staying informed was a task, yet I think Poles during this time – as they had been in the 1960s and 1970s – were more wellread than the English who were spoiled by the privileges of having shops full of goods, the ability to travel on impulse, and the privilege of not having an evil political system breathing down their neck.

In short, martial law’s greatest success was that ultimately, it failed.

Poles refused to be put down – they were so riled by it that several years later they toppled the system. In many ways, however, the years immediately after martial law and before 1989 were a disappointment. The determination and defiance that was present before had clearly faded from people’s faces.

Even though the strikes continued later, the protesters wore grave expressions, something that was easy for me to notice as a photojournalist.

The failures of success Between 1987 and 1993, I worked from Time’s Eastern Europe office in Vienna.

Even though I still spent enough time in Poland that it felt like I never left, being based in Vienna made it easier for me to witness the transformation in other countries. The city was much closer to Prague, Budapest, and even parts of Romania. Though the end of communism in Poland provided some iconic material, such as Tadeusz Mazowiecki’s victory sign, there was an evident lack of an easily-identifiable and symbolic end to the regime in Poland such as the fall of the Berlin Wall in Germany.

Because of the strong symbolism in their country, I feel that the Germans often receive undue credit for the transformation in Europe, when it was actually Poland where it all began.

The run-up to the partially free elections was exciting but the eventual victory was met without significant visual fanfare. Besides the sight of front-page headlines visible as people read the newspaper, the process of transformation in Poland was not as photogenic as it was elsewhere.

Since the transformation, I feel like Poland has been guided by a miscon-

ceived – official and otherwise – con- Warsaw, Februcept of democracy. Ugly billboards ary 1982. Martial law. Shopping in a plague the cities because of the misfood store. Bread taken assumption that they are a nec- crumbs, bread, salt, essary aspect of a capitalist society. It’s buckwheat groats, the “we fought for our freedom – we imported powdered milk for infants can do whatever we want” syndrome.

– not much else Many officials act in a way that is either was available. overly officious or simply incompetent.

Though I am not a supporter of any particular party, I feel like we would be better off if the right simply disappeared, as their main intention – and their only ability – seems to be to create divisions in our society.

The irony is, of course, that many people who constitute the right were the ones who participated in our peaceful transformation. To this I’d say that people who take part in revolutions should hang up their gloves once the fight is over. People like Tadeusz Mazowiecki left at the appropriate time, but others stayed in politics for too long. I have a positive impression of Lech Wałęsa based on our long history together, which began when I was one of the first journalists to document his role in Poland’s transformation.

Our country owes him a great deal of gratitude. His sharp tongue however, should have probably stayed away from politics once Solidarność had ousted the old regime.

I believe Poland’s contemporary problems to be characteristic of a developing country. The problem Borne Sulinowo is not that life is too difficult, but that Soviet Army base, 9 April, 1991. Soviet it can become too effortless. In peritroops stationed in ods of relative ease where challenges Poland leave by are few and far between, people have (cargo) train. a tendency to rust. This is becoming the case in Poland today, as it has been in the West for a long time. Despite these problems, I believe Poland to be a good place in which to live.

This might not mean a lot coming from someone who chose to live here during martial law, but my heartfelt devotion to the country is evidenced by the fact that I acquired Polish citizenship in 1998. I might be among the few going against the Poland-England emigration tide, but I expect that others will join me soon enough. Considering that I am sharing my thoughts for an English-language magazine based in Warsaw, it seems the time is nigh.

‘People who take part in revolutions should hang up their gloves once the fight is over.’

interviewed by Piotr Narel

34 leader

In their own words Piotr Narel asked average Poles how the events of 1989, joining NATO and EU membership have affected their lives

Look at the political polls and demo-

Piotr Narel is

a journalist with Poland Today. He is a native Pole but spent over 17 years in the United States.

He graduated from Loyola University Chicago in 2012 with a degree in International Studies. His research in Jordan on religious symbolism was his first published work.

‘The world stands open now – let’s hope the next generation lives better.’

graphic analyses, and you’ll find Poland is a country of stark divisions: liberalconservative, young-old, urban-rural, educated-uneducated. On many of the most important issues of the day, who falls on which side of an argument can fairly reliably be determined by which of those groups they fall into.

But when it comes to Poland’s transformation – its switch from communism to democracy and a market-driven economy, its accession to NATO and its entry into the European Union – Poles remain remarkably united in their view that it has been overwhelmingly positive. For example, despite the difficulties the EU has had recently, a full 68 percent of Poles see membership as a good thing. That’s one of the highest percentages in the bloc.

But transformation hasn’t been kind to everyone. There have been losers – Poland still faces tough challenges when it comes to poverty and economic inequality. We wanted to get the voice of the “average Kowalski and Kowalska” as it were, on whether they felt transformation had, overall, been positive or negative. The results were somewhat surprising: no matter what background, level of education or age, all saw transformation as positive.

Country bumpkins?

Instead of transporting ham on the train, Elżbieta now transports packages intended for businesses. “Our country would not be our country if it were not for the elections of 1989,” she said.

Lidia H., an administrator at a middle school in Sieradz, a town of slightly over 40,000 in central Poland, echoed that perspective. “I see my town develop on a daily basis thanks to European funding: renovation of the historic city area, new investments, the rebuilding of our theatre,” she said. In particular, EU membership has improved the level of education, she added. “Thanks to European funds and participation in many educational programmes, my school is constantly raising the level of instruction. The differences in education across Poland are disappearing.”

That, along with open European borders, has increased opportunity, she said. “I am overjoyed to see so many of my students go on to study at prestigious universities all over the world.”

Ewa P., from Bujały Gniewosze, a small village 110 kilometres south-west of Warsaw, pointed out how EU accession had improved the lives of Poland’s farmers. She also said, “those farmers in our region who still criticise Polish entry into the European Union do so because they have not taken advantage of the opportunities.”

Poles themselves expect societal divi- Old fogeys? sions to colour others’ views of transfor- Marta K., site marketing coordinamation. Jacek S., the director of the Długi tor with Neinver Asset Management Język language school in Warsaw, said, Polska in Wrocław, though full of praise “People who see the positive changes for Poland’s development over the past in Poland over the past 25 years are 25 years, said that age can be a factor mainly people who are educated and as to how positively Poles perceive the living in big cities, whereas people liv- changes. “The words ‘democracy’ and ing in rural areas don’t see them or don’t ‘freedom’ constitute an obvious realwant to see them, despite benefiting ity” for people her age she said, but not necessarily those of the older generafrom new technologies, grants, etc.”

But Elżbieta K., a railway courier from tion. She added that because she was Terespol, a small town of about 6,000 younger, she was “more flexible and on Poland’s eastern border, turned that eager for change.” view on its head. She said that people But older Poles had plenty of posifrom smaller towns like hers have actu- tive things to say about transformaally felt the changes in Poland more tion. Krystyna W., a retired nurse in her deeply than urbanites. “As a young 70s from Mińsk Mazowiecki said, “The girl during communism, my mother European Union opened us up to the and I would frequently ride the trains world and allowed Poles to travel and to Warsaw just so we could buy ham,” work abroad.” Sławomir S. from Łódź, a round-trip of some 400 kilometres. a 60-something former taxi driver, saw “As a little girl – it was an adventure, but hope for the future. “For retired peonow I see how things have changed.” ple like me, life is quite difficult because

36

of low pensions and a healthcare system which leaves much to be desired,” he said. “But the world stands open now – let’s hope the next generation lives better and doesn’t suffer from too much unemployment.” Witold S., a retired engineer from Białystok, praised Poland’s NATO membership, citing the increase in national security.

leader

European direction

‘Money isn’t everything.

Freedom is most important.’

Throwing off communism allowed Poland to align itself with Western Europe, and over the past 10 years, EU accession has greatly sped up the country’s development.

Those we spoke with were unanimous about the positive effects: both economic and political. Sławomir W., an IT specialist from Kraków, gave a piercing look when asked in what way Polish people benefit from the EU. “In every way,” he answered. Barbara M., a Lab Researcher from Nasielsk (a small town 30 kilometres north of Warsaw) said, “With Polish entrance into the EU, our country became much more important.

Even if there are still people living below the poverty line, at least our country now has a say in world affairs.”

Bartek W., a senior mobile developer at Gadu Gadu in Warsaw, focused on the practical advantages. He said that Polish accession into the EU allows for greater “cooperation between EU countries with clear and safe accounting methods resulting in greater trust towards our country.” He pointed out that “those who prefer to do business locally can count on EU funds to help them start their business and, because of the EU, enjoy all the other benefits of living in a generally more prosperous country.”

Power to the people

Coming back While much has been made of Poles leaving their country for Western Europe, EU accession convinced many to come back or find business links between their new and old homes.

Janusz W., an attorney from the Silesian region in southern Poland said that in 2004 he was living in the Netherlands but returned because EU accession offered him the opportunity to work in his own country.

Entrepreneur Filip N. said, “My family is Polish and I was initially raised in a Polish-speaking household even though we were in Germany. At some point when I was a teenager, both my parents and I stopped speaking Polish, even to each other. Since EU accession, I travel between Berlin and Warsaw for my software company and use Polish frequently.”

Justyna P., who was mentioned above, is an accountant living in Belgium.

“I return to Poland at least once a month for a long weekend because the feeling that I get when I’m in my own country is priceless,” she said. “For me, being Polish means buying Polish products, working to change negative Polish stereotypes, and representing our country well.”

Leszek R., a dermatologist in Gdy­ nia, had an interesting perspective: “Ironically, if Poland had not democratised, my family and I would have lived in greater economic comfort because I would have stayed abroad. Tha­­­­­­nks to the transformation, however, I happily returned to my country and now I take advantage of the possibilities of a democratic Europe, building its stability in my native country as my ancestors have done for over a thousand years.”

Making up for lost time

So EU accession has brought money The positive change can be felt in and opportunity while NATO mem- ways large and small. Jacek “Dżej bership has brought greater security. Dżej” (Jay-Jay) Jędrzejak from Ostrów But Poles point out that none of this Wielkopolski in west-central Poland, is a would have been possible if it hadn’t member of the rock bands Big Cyc and been for the events of 1989. Justyna P. Czarno Czarni. “We are in the process from Pabianice, a town of about 69,000 of making up for years of negligence,” in central Poland said, “Poland join- he said. “I believe that in the past ing NATO and the EU depended, and 25 years, we have been able to achieve was influenced by, foreign actors. The very much. We are more friendly, open, elections in 1989 were the most impor- and tolerant. We respect the rights tant event in Poland’s recent history of others and accept the individual because it was something that was differences between people. We no accomplished entirely by Polish people longer look at a black person as an for Poland.” arrival from another planet.”

For many Poles, the political change More opportunity, more developof 1989 represented something of a ment, more security. More openness rebirth of their country. Łukasz Z., and tolerance.

These were the goals of those who a student from Radom, said the 1989 elections were a “national victory” that banded together in Solidarity prior ended “Soviet rule.” Mariusz S., a stu- to 1989 to change Poland and make dent from Białystok, scoffed when Poles’ lives the better. What came of asked to compare 1989 to 1999 or their efforts? Ask most Poles today and 2004. He said, “Money isn’t everything. the answer is clear: they succeeded.

Freedom is most important.”

by Piotr Narel

38 LEADER

Poland Transformed: An executive conference from Poland Today Exploring the role Polish business played in the country's successful transformation

Twenty-five years

Transformation awards: The confer-

ence will conclude with a special cocktail evening featuring the announcement of the nominees of the Poland Today Awards, which will be handed out in December.

The 25 companies and businesspeople who have played the biggest role in Poland's successful transformation will receive the awards during a gala event.

ago Poland’s economy was still centrally planned.

Business, as such, was almost entirely conducted by the state and the few private and foreign businesses that existed were hamstrung at every opportunity. Its economy was on the verge of bankruptcy.

How things have changed. Poland is now one of the world’s great success stories. This year, the European Commission expects the Polish economy to grow faster than all other EU members, with the exceptions of Latvia and Lithuania.

Therefore, it is timely that 2014 marks 25 years of transformation in Poland.

While most of the events this year will focus on transformation from a political and societal point of view, Poland Today will take a different perspective.

In accordance with our mission to bring Poland to the world and the world to Poland, we will look at transformation from an international angle, with a clear focus on how business helped change the country, and how the events of the last 25 years helped change business.

Business is an integral part of the story that must not be overlooked.

To this end, we are organising the Poland Transformed conference on May 28 at Endorfina Foksal in Warsaw. Under the honorary patronage of President Bronisław Komorowski, and with the

media patronage of the Financial Times, our conference will be divided into two parts. The first portion will consist of panel discussions featuring business leaders and top decision makers, sharing their stories and insights. Edward Lucas, senior editor at The Economist, will deliver the keynote address.

The second portion of the conference will comprise breakout sessions with a forward-looking view. Participants will be free to contribute to, among others, discussions on entrepreneurship, innovation and leadership.

To give the event a thoroughly international angle and global visibility, Poland Today will invite 50 journalists from all over the world, including from fellow EU and NATO member states, Poland's biggest foreign investors and countries where Polish business is expanding. We will be working closely with the embassies and international chambers of commerce to make sure that we secure the participation of leading journalists from major publications. These journalists will see first-hand how business contributed to Poland’s transformation and we expect them to return to their home countries and spread the message about Poland’s success. They will also have the opportunity to speak with the companies and partners involved.

Unleashing business helped write Europe’s biggest economic success story. Join us on May 28 to find out what the past has to teach us about the future.

Topics to be discussed: Poland’s transformation: What is the global view?

Poland’s “New Golden Age”: How did we get here and what lessons can be learnt?

Symbols of transformation: Stories of business success in a changing economy

New destinations for Polish business: What parts of the world hold the greatest opportunities for Polish firms?

Innovation:

What is needed for Poland to make its next transformation into an innovation economy?

Leadership for the next 25 years: How will leaders have to adjust?

Entrepreneurship:

How can Poland continue to capitalise on its citizens’ entrepreneurial spirit?

the president's appeal Poland Today will follow the lead of Presi-

dent Bronisław Komorowski, who called on friends of Poland to take on endeavours to tell the world about Poland’s transformation story: “I invite everybody to organise joint undertakings. I invite private individuals and institutions, public offices and non-governmental organisations, business circles, public institutions and self-government bodies. I invite those residing in rural areas, in small towns and in metropolises where Polish people live, including those lying across the ocean. I would like the world to have a chance to get to know us ... as a nation of free people, appreciating their own freedom and supporting others on their not-so-easy road towards freedom.”

CONFERENCE & COCkTAIL PARTY

Poland Transformed 28 May 2014 | Endorfina Foksal | ul. Foksal 2, Warsaw

Celebrating

25 years of economic transformation How unleashing business helped write Europe’s biggest economic success story.

Join key figures from the domestic and international business community & 50 leading international journalists, including Edward Lucas, Senior Editor of The Economist, and discover what the past has to teach us about the future. www.poland-today.pl

content partner

Under the Patronage of the President of the Republic of Poland, Bronisław Komorowski.

25 years of freedom.

media partner

40 The image-fixer PROFILE

A reputation for competence and efficacy has catapulted Elżbieta Bieńkowska to the top of Polish politics

His government beleaguered and his party down in the polls, would be marred by misspent funds and accusations of croPrime Minister Donald Tusk wanted to grab voters’ attention nyism. Bieńkowska says the secret to her success is hard last November. He opted for a major cabinet reshuffle that work and denies accusations of political ambition. “I’m not would propel Elżbieta Bieńkowska, a self-described techno- here to build a public relations image. I’m here to work,” she crat from the industrial district of Silesia, to the upper ech- said after the Polish tabloids went after her for yet another winter of train delays. Admitting that such delays were probelons of his government.

Tusk’s Civic Platform (PO) party, facing European ably inevitable in sub-zero temperatures, she quipped, “Sorry.

Parliament elections in May, local government elections in the That’s our climate.” Nevertheless, Bieńkowska seems to disautumn and parliamentary elections next year, desperately like publicity. When the Polish media dubbed her Poland’s needed to present a strong, competent image. The opposi- “Elizabeth I”, a reference to the 16th century British montion Law and Justice (PiS) party was capitalising on gen- arch, she recoiled. In government meetings she generally eral discontent with the second-term takes a low profile.

Despite declarations that she wants Krzysztof Bobiński government, as the economy slogged is the head of Unia & through its worst year in terms of GDP to stay out of politics, Bieńkowska Polska, a pro European growth since 2009. ran successfully for the Polish Senate organization. He was Putting Bieńkowska, then the minisfrom the Katowice region in a first past the Financial Times’ Warsaw correspondent ter of regional development, in the spotthe post contest in 2011. The campaign until 2000. He writes required a greater deal of public expolight helped remind voters that the occasionally for Tusk government had won €105.8bn in sure than she usually aims to attract. openDemocracy.org funding from the EU for the 2014-2020 Donald Tusk might be disappointed and the European period. Bieńkowska had received much that Bieńkowska tends to shy away Voice. of the credit for Poland’s high EU fundfrom the media when he had hoped that she would do more to improve ing absorption rate from the previous budget. Tusk could use the promotion the government’s public image. But at least she has remained relatively to reassure the public that the next wave of money would be well-spent. free from adding to the PR problems In the shake-up he widened her portfothat bedevil the administration. lio, making her minister of infrastructure Silesian roots and development, and appointed her as deputy prime minister.

Bieńkowska remains deeply attached to Silesia. During some public events in Surprising path the region, the heart of Poland’s coal Bieńkowska was born in Katowice in industry, she has been known to don a traditional miner’s uniform. Being from 1964 and still lives in nearby Mysłowice.

She is a specialist in EU regional funds, an area that is closer to the Czech but in 1982 little suggested she would Republic than to Warsaw gives her follow such a career. That was during the insight into the needs of far-flung localfirst year of martial law, and Bieńkowska ities. But she has a keen understandwas finishing school. She enrolled in the ing of this government as well – every Jagiellonian University where she took other ministry has officers dedicated up Iranian studies, eventually earning to issues regarding EU funding. Known a master’s degree in oriental philology. as both a lover of classical music and In 1989, Bieńkowska initially opted not to pursue a career, an attendee of rock concerts, Bieńkowska manages to cominstead deciding to care for her young children. Then, on her bine a punishing government workload with a presence father’s advice, she attended Poland’s civil service college at home, where she devotes attention to her three children, (KSAP) and later earned an MBA from the Warsaw School the youngest of whom is 10 years old. of Economics (SGH).

She has focused Poland’s regional policy on support In the meantime she made her mark in the Katowice for voivodship capitals and medium-sized towns. Funds have Regional administration from 1996, working on EU pre-acces- also been pencilled in for energy efficiency projects and pubsion and then regional funds where she was talent-spotted lic transport, including railways. She has said she is commitby Jan Olbrycht, a local Silesia politician who would later ted to pushing ahead with Poland’s road building programme. serve as a member of the European Parliament for PO. When But importantly, Poland is required to spend much of the new Tusk was compiling his first government in 2007, Olbrycht EU largesse on promoting innovation. Improving and unifying was among those who suggested he appoint Bieńkowska local government innovation strategies so that they comply as regional development minister, making her responsible with Polish and EU rules will likely prove a daunting task. for administering EU funds nationally.

Those funds – and their effective use – are crucial to Poland’s Since then her missteps have been rare. The first years future. Political ambition or no, she now holds a great deal of Poland’s EU-fund distribution were relatively scandal-free. of power. Bieńkowska wants to be known for her hard work.

This scotched the fears of EU officials that the early days She has plenty ahead of her. by Krzysztof Bobiński

‘I’m not here to build a public relations image.

I’m here to work.’

41

PROFILE

Deputy Prime Minister & Minister

photo: Rafał Siderski (Forum)

of Infrastructure & Development Elżbieta Bieńkowska will be the keynote speaker at Poland Today’s ‘Primetime Warsaw’ conference on Thursday, 3 April, 2014 at the Conference Center Muranów, Museum of the History of the Polish Jews.

42

INTERNATIONAL

Split at the weak points The crisis in Ukraine has laid bare the country’s stark divisions

Jan Cienski

is the Warsaw and Prague correspondent for the Financial Times.

He has been in Warsaw since 2003. Prior to that he spent five years as the Washington correspondent for the National Post, a Canadian newspaper.

He also spent several years in the US working for the Associated Press. From 1992 to 1995 he worked in Moscow for the German News Agency DPA. Jan has a degree in international relations from the University of Toronto.

‘Eastern and western Ukraine can seem like foreign countries.’

‘These people died to protect us.’

Split down the middle? Ukraine’s

many substantial rifts have led the country down a frightening path over the past few months.

43

INTERNATIONAL

When taking an axe to a piece of

died to protect us,” said one woman and annexed those territories to Soviet wood, it helps to take a close look at clutching carnations during a funeral Ukraine. That left both parts of Ukraine the run of the grain and cleave the log ceremony at Lviv’s historic Lychakiv with very different experiences of comalong its weakest point. That seems to cemetery. The dead were also com- munism and the war. The east had be the approach chosen by Russia’s memorated in Kharkiv, the main city been starved under Stalin’s policies, Vladimir Putin, and unfortunately for in eastern Ukraine. As in Lviv, people while the west was shaped by fightUkraine the country has a lot more than left flowers and candles at the foot of ing against Polish nationalism. In the one weak point along which it can be pictures of the dead. However, the pic- east, millions took part in the Soviet split. Ukraine’s fragilities have become tures showed young men in uniform war effort. In the west, the heroes were particularly apparent during the ongo- – the police officers who were killed UPA partisans, despite their tarnished ing crisis. while fighting the protesters. record of also undertaking a bloody “They died to stop the fascists from ethnic cleansing campaign against Western Ukraine’s leading city of Lviv provided financial, organisational western Ukraine,” said Oleg, a wiry Polish civilians and occasionally coopand even muscle power during the long man holding a battered chair leg he erating with the Germans.

To this day, western Ukrainians see months of confrontation with ousted had used a day earlier in a battle that president Viktor Yanukovych. On most saw thousands of people attack several their eastern countrymen as Russified nights buses would pull up outside the hundred protesters who had seized communists, while the east views the Vienna Café in the centre of historic local government offices hoping to west as fascists and Nazi sympathisers Lviv and load up with demonstrators replicate the same revolution that had – in part the result of decades of propaheading off to take part in the protests succeeded in Kiev. Eastern and west- ganda under Soviet rule. “Our parents in Kiev. The transport was organised by ern Ukraine can seem like foreign coun- and grandparents fought against those local businessmen, who helped finance tries – a much larger regional divide fascist scum,” yelled an angry woman the effort and even allowed their work- than is present in most other European taking part in a pro-Russian demoners time off to travel to the capital for countries. Even the languages are dif- stration in Donetsk, the coal and steel days at a time. ferent. In the west, Ukrainian tongue capital of eastern Ukraine. is used almost exclusively, while in the Popular movement east the dominant language is Russian. Bottom line The struggle against Yanukovych “Some grannies in small villages speak Even the economies of the two halves pulled in thousands of people. The Ukrainian, but I haven’t run into anyone of the country are different. In the east, Vienna Café was crowded around the in Kharkiv who speaks it on a regular heavy industries built around steel clock with people stuffing crumpled basis,” said a driver trolling for business and coal dominate. Shady privatisahyrvnias into collection jars, while oth- at the Ukrainian-Russian border just 40 tions in the 1990s led to the creation of a class of hugely wealthy oligarchs ers organised food and volunteer lists. km east of Kharkiv.

Collection points elsewhere in the city who seized control of many of those saw people dropping off warm clothes House divided industries, and command the econofor the demonstrators. The struggle They voted very differently in recent mies of cities like Donetsk and Kharkiv. became so all-consuming that many elections. The east and the south Trade ties are also with Russia, and west Ukrainians dropped the cus- supported Yanukovych and his Party support for joining a Moscow-led customary Ukrainian greeting of “Good of Regions, while the north and west toms union is strong. There are fewer Day” and instead adopted the call and opted for Yulia Tymoshenko and her heavy industries in the west, which response of “Glory to Ukraine” and “To Batkivshchyna party. Even their his- has allowed for a larger class of small the heroes glory” used by the wartime tories are very different. Eastern and and medium-sized business to develop Ukrainian Partisan Army which battled western Ukraine have not been part than in eastern Ukraine and fewer the Soviets into the 1950s. The effort of a single state for centuries. The overweening oligarchs. Trade ties are was replicated across western Ukraine east very quickly fell under Moscow’s with the west, and support for an assowith cities like Ternopil and Ivano- sway starting in the 17th century. The ciation agreement with the European Frankivsk also sending volunteers to west was part of the Polish-Lithuanian Union is widespread.

“The agreement would make a huge Kiev. The cost was also apparent. More Commonwealth, and after that state lost than a third of the demonstrators killed its independence most of the region difference to my bottom line,” said in Kiev came from western Ukraine. ended up in the Austro-Hungarian Yaroslav Rushchyshyn, who owns a Lviv After Yanukovych fled, leading dis- Empire. The Hapsburgs were more tol- textile factory. Those very deep differgusted Ukrainians to wander through erant of the nationalities living under ences have explained why Russia was the ground of his opulent and kitschy their crown than Russia’s Romanovs, able to make such an easy advance into log palace outside the capital, one of who advocated Russification. That Ukraine during its invasion of Crimea.

Lviv’s main squares was turned into allowed for the creation of a modern

by Jan Cienski a memorial shrine. Hundreds of peo- Ukrainian nationalism centred in Lviv.

The two halves were only cemented ple shuffled past photographs of the dead, many of them with tears run- into a single state in 1939, when the ning down their faces. “These people Soviets conquered eastern Poland

Line of protesters facing the massive fire set by protesters

to prevent internal forces from crossing the barricade line.

Kyiv, Ukraine.

Jan 22, 2014.

44 The chaos next door INTERNATIONAL

What happens next in Ukraine will have a huge impact on Poland

Horrifying images:

The crisis in Ukraine dominated Polish news coverage in February. Poles watched as the country that only months before had hosted Euro 2012 with them teetered on the brink of civil war.

‘If Kiev comes under the thumb of the Kremlin, it could have drastic consequences.’

The world watched in horror in late February as Kiev’s Independence Square disintegrated into a battle zone. Flames licked the sky as tyre-fires burned on makeshift barricades metres high and hundreds of yards long. As violence escalated, riot police and snipers used live ammunition against protesters, who hurled cobblestones and Molotov cocktails.

By the time it was over, on 21 February, there were estimates of as many as 100 killed and hundreds of others injured.

All this on the same square where just 19 months earlier fans from around Europe had gathered to cheer on their national football teams as Ukraine co-hosted the Euro 2012 tournament with Poland.

What had started out as protests stemming from the Ukrainian government's refusal to sign an association agreement with the EU became a popular movement against widespread and pervasive corruption, and especially against President Viktor Yanukovych, who had aligned himself with Russia. As the conflict spread to other cities, threatening to spiral out of control into an all-out civil war, Poland became increasingly involved. Along with his counterparts from France and Germany, Polish Foreign Minister Radosław Sikorski played a key role in brokering an agreement that halted the violence.

Since then, Yanukovych has fled, and a new transitional government has taken power. But Russia's use of military force to occupy Crimea has brought a new sense of insecurity. As Poland Today went to press tensions were high and the new government strained to hold Ukraine together.

Global leaders traded warnings but were due to meet in various global organisations over the coming days. The aim: to prevent an escalation of the tension.

photo: Tomasz Adamowicz (Forum)

Geopolitical prize If all or part of Ukraine comes under the thumb of the Kremlin, it could have drastic consequences for Poland, both political and economic. Pipelines that carry fuel critical to the Polish economy, namely Russian oil and natural gas, travel through Ukraine. The taps could be turned off if Moscow decides it is in its interest to exert pressure on Warsaw.

It has done so before – cutting off gas to Ukraine in the winter during political disputes.

With these concerns in mind Poland, along with Sweden, established the European Union’s Eastern Partnership programme, which aimed to strengthen ties with countries such as Ukraine in the bloc’s post-communist neighbourhood.

It was under the auspices of that programme that Poland had pushed for the EU to solidify ties with Kiev through an association and free trade deal. Russia, which sees Ukraine as a critical geopolitical prize, scuppered the agreement in November – and the movement that eventually led to Yanukovych's ouster began.

With a new set of leaders calling the shots in Kiev and pro-Russian regions considering secession, Ukraine’s future remains frightfully uncertain. Renewed violence remains a very real possibility, and the country's new leaders will have a divided country to manage. Expect to see Poland very involved in ensuring its neighbour holds off pressure – both economic and military – from Moscow. by Andrew Kureth

45

INTERNATIONAL

The 2013-2014 Ukraine CRISIS A TIME LINE: 21 Nov. 2013 – President Viktor Yanukovych

announces that Ukraine will not sign the association agreement with the EU. Protests erupt in Kiev soon after.

30 Nov. 2013 – Police launch a brutal attack on protesters. Public support in Ukraine is galvanized in favour of the protesters.

1 Dec. 2013 – A demonstration attracts around 300,000 people, the largest protest in Kiev since the Orange Revolution in 2004.

22 Jan. 2014 – Two protesters die after being

hit with live ammunition and a third after a fall during a confrontation between police and demonstrators manning barricades, the first protest deaths.

18 Feb. 2014 – Pro-European protesters march from Independence Square to parliament. Riot police storm the square, breaking through barricades. Protesters fight back, refusing to leave.

Twenty-eight people die in the unrest, according to Ukraine’s health authorities.

20 Feb. 2014 – Police open fire on protesters

for the third day in a row. According to the official toll, 82 were killed over the three days, including around 15 police officers. Opposition figures put the toll at closer to 100 dead, including protesters and police.

21 Feb. 2014 – After the foreign ministers

of France, Germany and Poland arrive in Kiev and push negotiations forward, President Yanukovych and opposition leaders sign a deal that includes early elections and the formation of a new government.

22 Feb. 2014 – Parliament votes to free imprisoned opposition leader Yulia Tymoshenko and to hold early presidential elections on May 25.

It passes a resolution stating that Yanukovych has failed to fulfil his duties as president.

23 Feb. 2014 – Oleksandr Turchynov is elected interim president by parliament. Ukraine’s ruling Regions Party abandons support for Yanukovych. Russia recalls its ambassador to Ukraine.

26 Feb. 2014 – Ukraine disbands the elite Berkut riot police. Russian President Vladimir Putin orders a snap check of the battle-readiness of the armed forces in the west and centre of his country. Pro-Russian demonstrators brawl with supporters of the new interim ­authorities in Simferopol, the capital of the Black Sea peninsula region of Crimea.

27 Feb. 2014 – A pro-Western cabinet, led

by economist and Tymoshenko ally Arseniy Yatsenyuk, is elected by Ukraine’s parliament. to Ukraine.

2 March 2014 – The Russian military seizes control of Crimea.

‘Poland could stand to benefit if a new government in Kiev is more EU-friendly.’

Eugene Chausovsky

Analyst for Eurasia Stratfor

The crisis in Ukraine has a significant impact on Poland, given that Ukraine’s foreign policy orientation is of tremendous significance to Poland. Poland has been one of the outspoken leaders of bringing Ukraine closer to the EU, and along with Sweden initiated the EU’s flagship Eastern Partnership program. It is this program which brought Ukraine very close to signing the key association and free trade agreements with the bloc, and it was Ukrainian President Viktor Yanukovych's lastminute U-turn on these deals in late November that precipitated the demonstrations in Ukraine.

The protests quickly took on a general anti-government nature, and now we see the possibility of significant changes to the government in the form of a new parliament, changes to the constitution with diminished presidential powers, and early presidential elections. Poland could therefore stand to benefit from the new government in Kiev’s more EU-friendly position.

However, such a government would be at odds with Russia, which remains a key actor in Ukraine in the political, economic, and security realms.

This would create a more unstable and dynamic situation in Ukraine, and would likely intensify tensions between Russia and the EU, to include Moscow’s bilateral relationship with Warsaw.

Ievgen Vorobiov

Analyst at the Polish Institute of International Affairs (PISM), Ukraine, Russia and Eastern Europe expert

We have to put this crisis into perspective. Almost 10 years ago during the Orange Revolution of 2004-2005, Ukrainians were also calling for greater legitimacy in their government. Poland was very active through its president at the time, Aleksander Kwaśniewski, and Poland was successful in helping the Orange Revolution bring about free elections.

But this time is also very different: there has been much more violence.

Poland, nevertheless, took a similar position. It wanted a solution that would include all of the players.

It was working to bring the authorities and rebels together in compromise.

This is where Poland used its experience, based on its transformation 25 years ago.

Russia’s approach this time around was very different. It has been much less willing to contribute to peaceful negotiations. It is now simply trying to push the West out of Ukraine.

Poland, on the other hand, is trying to make sure that Russia does not simply impose its will. And there we see a difference in the Polish approach: it has been more outspoken, more explicit about Russia meddling in Ukrainian affairs.

If Russia is allowed to tighten its grip on Ukraine, that would be a threat to democracies in the EU. Russia’s support for undermining democracy in its neighbourhood is half the problem; the other half is governance and corruption.

Russia has shown, through energy conflicts with Ukraine, that it is willing to use its economic power to exert political pressure.

A tighter Russian grip on Ukraine would untie Russia’s hands in the EU’s eastern members, including Poland, by using energy, trade and military capacities as pressure tools.

46 Business

Kraków is the best

Economy

location for business process outsourcing (BPO) investments in Europe, according to the 2014 Tholons Top 100 Outsourcing Destinations ranking.

The city took 9th place worldwide.

GDP grows 1.6% in 2013

Poland’s gross domestic product grew an estimated 1.6% year-on-year in 2013, beating average projections for 1.5% increase, according to preliminary estimates by Poland’s statistics office, GUS. Although the flash figure indicates that growth picked up sharply in the second half of last year, it remains 0.3 percentage points lower than in 2012 and matches an ­11-year low reached in 2009. Private consumption slowed to 0.8% from 1.2%, while fixed investment fell 0.4% from a year earlier, GUS said.

Poland's economy grew 1.6% in 2013,

slightly faster than expected, as shoppers opened their wallets wider in the second half of the year.

Poland’s gross domestic product (GDP) could grow by as much as 3% this year, economists predict.

Inflation lowest in a decade

photo: Marcin Dlawichowski (Forum), Maciej Plewinski (Forum)

Poland’s consumer prices increased 0.9% yearon-year in 2013, the lowest growth in a decade, statistics office GUS said. The low inflation came despite record-low interest rates.

In 2012 inflation topped 3.7%.

Most bankruptcies since 2005

Although the number of bankruptcies in Poland increased by merely 1% last year, 2013 was the worst year since 2005, with 883 companies going under, according to credit insurer Coface.

The firm noted, however, that the negative trend saw a much-awaited reversal in the final quarter of 2013.

Rankings

Poland moves up in Economic Freedom Index

Poland has moved up seven places to 50th position in the annual Economic Freedom Index compiled by the US’s Heritage Foundation and the Wall Street Journal. “Over the 20-year history of the Index, Poland’s economic freedom score has advanced by about 16 points, a top-20 improvement,” the Heritage Foundation said. With increases in nine of the 10 economic freedoms and no declines, Poland has risen since 2002 to the category of “moderately free”, the foundation added.

Business round-up

Kraków number one in Europe for BPO

In the 2014 Tholons Top 100 Outsourcing Destinations ranking, Kraków rose to the 9th spot worldwide, dislodging Dublin and becoming number-one city in Europe. Warsaw (in 32nd place) was four positions higher than it was in last year’s ranking. Wrocław (65th) rose the most (10 spots) among all 100 cities in the ranking. The business process outsourcing (BPO) and shared services (SSC) sector employs some 115,000 staff in Poland at the moment, and according to estimates it will create a further 15,000-20,000 jobs in 2014.

Poland tops Bloomberg’s “best for business” ranking

Poland ranked first among 21 countries in a brand new Bloomberg Rankings survey for 2014 as the best place to do business in Eastern Europe and Central Asia. The ranking cited Poland’s expanding consumer market and ­improving infrastructure. The European Union’s largest eastern economy ranked 26th of the 214 countries worldwide that were evaluated.

Ratings agencies

S&P opens Warsaw office

US ratings agency Standard & Poor’s has opened an office in Warsaw, following a similar move by its competitor Moody’s in July last year. Although each agency only has a single permanent staff member in Warsaw, their presence marks the city’s growing importance as Central Europe’s key financial hub.

Defence

Italians win jet trainer tender

Poland awarded a €280m jet trainer contract to Alenia Aermacchi, part of Italy’s Finmeccanica group. The firm is to deliver eight M-346 aircraft to the Polish military for use in pilot training. Finmeccanica’s subsidiary AgustaWestland owns Polish helicopter maker PZL Świdnik.

Investment

PIR to co-finance high-speed internet project

Poland’s state-owned investment vehicle Polskie Inwestycje Rozwojowe (PIR), has signed an agreement with the WSE-listed backbone network operator HAWE concerning a potential joint investment in a fibre-to-home network that will bring ultra high-speed internet access to 870,000 households in Poland.

The investment will amount to approximately 560m zł over six years and PIR’s share in the venture is likely to reach close to 120m zł.

Parcel terminal firm targets US and Asia

After installing more than 3,000 self-service parcel terminals in 19 countries, the Krakówbased postal services company Integer.pl is seeking €150m for the second phase of its global expansion. “Our goal is to be present in North and South America, as well as Asia, over the coming three to four years. In the US alone, we plan to launch 10,000 parcel lockers by the end of 2016. We are currently in the process of securing a further 6,000 locations for our terminals,” Rafał Brzóska, founder and CEO of Integer.pl told Poland Today.

Real estate

Panattoni & Goodman to build 300,000 sqm for Amazon

Industrial space developer Panattoni is to deliver 201,000 sqm of modern warehouse space for e-commerce giant Amazon in what is regarded as the largest-ever deal in Central and Eastern Europe’s real estate market. The two centres, each with a capex of €80m, will be located near Wrocław and Poznań. The contract follows Amazon’s earlier agreement with Goodman for a 95,000 sqm distribution facility near Wrocław. Amazon is to create 2,000 permanent jobs at each of its three Polish logistics centres (two of which will launch in H2 2014), and will hire an additional 1,000 temporary workers in the run-up to the holiday season.

Property group seeking new owner

The government wants to sell its 73% stake in the Warsaw-listed real estate group Polski Holding Nieruchomości (PHN) by mid-2014.

The company’s asset portfolio, which includes office, retail, residential, hotel and industrial buildings, as well as a number of attractive investment sites, was worth 2.2bn zł as of the end of 2013, according to CBRE.

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Business

was adopted by the Polish government.

It envisions the country’s first nuclear power plant coming online in 2025. A location for the plant still remains to be chosen, however.

Automobile production declined in

Poland by 9.6% last year, though sales were up by 6.4%.

Analysts expect figures to improve this year as the country’s economy gets back on track. photo: Ireneusz Kaźmierczak (Forum). wikimedia commons

48

Poland’s nuclear power programme

Mergers & acquisitions

Warsaw bourse acquires Aquis Exchange

The Warsaw Stock Exchange has acquired a 30% stake in the UK-based multilateral trading facility Aquis Exchange Ltd, which launched at the end of November 2013, enabling trading in top British, French and Dutch securities.

With the £5m investment the WSE aims to diversify its revenues and strengthen its position in the global financial market. The WSE lists about 450 companies on its main market, with a combined value of about 841bn zł as of the end of 2013.

Auchan completes Real takeover

French retailer Auchan’s has completed the acquisition of 54 Real hypermarkets in Poland from Germany’s Metro AG. However, as a condition for its approval for the transaction, Poland’s consumer protection watchdog has stipulated that Auchan, which currently operates 27 stores across Poland, must sell eight Real locations within 18 months from the purchase in order to ensure fair competition is maintained. Auchan paid Metro AG a total of €1.1bn for 91 Real outlets in Poland, Russia, Ukraine, and Romania. As of July 2013, Poland had more than 260 hypermarkets and several thousand smaller food retail formats.

Business round-up

Japanese giant buys Polish Dax Cosmetics

The Mentholatum Company, a US producer of non-prescription healthcare products, has agreed to acquire one of Poland’s leading manufacturers of makeup and skin-care products Dax Cosmetics. The takeover gives Mentholatum’s owner, Japan’s Rohto Pharmaceutical, a foothold on the highly prospective Polish market. With a staff of 200, Dax Cosmetics turns over approximately 80m zł per year.

UK’s Cineworld buys top cinema chain

Britain’s top cinema operator Cineworld has agreed to acquire majority ownership in Cinema City International, a leading player in Central and Eastern Europe and Israel in a cash and shares deal worth about £500m. Cinema City, which is listed on the Warsaw Stock Exchange, operates 99 multiplexes with 966 screens in seven countries, including Poland, where it is the market leader with 31 movie theatres. Poland’s second largest multiplex operator Multikino was acquired by Cineworld’s competitor, British Vue Entertainment last year.

energy

Automotive

Green light for nuclear power

GM confirms huge investment in Tychy

Poland’s first nuclear power unit will come online by 2025, according to the national nuclear power programme the Polish government adopted at the end of January. Besides outlining a schedule for Poland’s nuclear power investments, this crucial document provides a regulatory and organisational framework for the projects, which are being managed by the country’s top power utility PGE. PGE is in the process of selecting an engineer for the project.

Poland seeks to build two 3,000MW nuclear power stations, each with an estimated price tag of 40-60bn zł.

Multibillion energy project in Opole gets underway

Poland’s top power utility PGE has launched the construction of two coal-fired 900MW power units in Opole that according to the government are key for the country’s long-term electricity supply. Announced back in 2012, the 11.6bn zł undertaking is the largest project ever initiated in Poland’s energy sector. Contractors include Polimex-Mostostal, Mostostal Warszawa, Rafako and Alstom.

San Leon set to launch shale gas production

Dublin-based San Leon Energy may soon be ready to launch the first shale gas production operation in Europe after passing a “major milestone” when testing at one of its Polish wells was successful, company representatives said. Poland, which consumes 15bn cubic metres of gas a year, mostly imported from Russia, has estimated its recoverable shale gas reserves at up to 768bn cubic metres.

Vattenfall completes exit from Polish market

Swedish energy giant Vattenfall has sold its entire stake in Poland’s fourth-biggest power utility Enea for slightly more than 1bn zł. The entire stake of 82.4m shares, equivalent to 18.67% of Enea’s share capital, was sold for 12.50 zł per share, the company said. The transaction concludes Vattenfall’s exit, which began in 2011.

US carmaker GM has announced plans to invest €250m in its engine factory in the southern Polish town of Tychy. According to GM, the ­factory will launch production of all-aluminium, 1.6-litre, four-cylinder diesel engines in 2017. GM’s Polish business employs some 3,500 staff total in its Gliwice and Tychy plants. Poland’s automotive exports came to approximately €18bn in 2013.

Car sales up, production down

New passenger car and light commercial vehicle registrations came to 332,100 last year, representing annual growth of 6.4%, according to Poland’s central vehicle register CEP. Despite the slight improvement in sales, Poland-based car manufacturers turned out 575,117 passenger cars and light commercial vehicles last year, marking a 9.6% drop from 2012.

Retail

Biedronka on track to have 3,000 stores in 2015

Portuguese-owned retailer Jeronimo Martins Polska said it is seeking to expand its discount supermarket chain Biedronka to 3,000 stores by the end of 2015, from 2,400 locations as of February. Biedronka’s sales rose by approximately 15% year-on-year in 2013 and came to €7.7bn (32bn zł).

New discount chain to open 100 stores annually Poznań-based group Czerwona Torebka, which is run by the creators of the retail formats Biedronka, Żabka and Eurocash, has launched a new discount grocery chain called Dyskont Czerwona Torebka, which wants to open 100 new stores per year. Nine pilot stores have already been opened with another 80 currently under construction and a further 200 or so at preparatory stages. There are an estimated 3,000 discount grocery stores throughout Poland, but experts believe the market can absorb more than 5,000.

50

The pension hole

Poland’s 1999 retirement reform was a costly experiment, and a solution to how pensions will be funded in the future remains to be found

While Poland’s economic transformation

OFEs: Open pension

funds (or OFEs) were designed to ensure that Poles paying into the pension system now would have some private savings before they retired.

But diverting money into private hands for future pensioners drastically underfunded the pension system for those currently retired, forcing the government to borrow heavily.

from a centrally managed Soviet-style system into a dynamic modern economy has been nothing short of extraordinary, the country has seen its share of pitfalls along the way.

Arguably, one of the most spectacular fiascos has been the 1999 pension reform, which the current government of Prime Minister Donald Tusk recently scrapped in a desperate move to avert a debt crisis. Its importance for Poland’s state finances and Poles’ future retirement savings could not be greater, but when it comes to the government’s actions and their consequences for the Polish economy, confusion reigns. Was the government’s reform a smash-and-grab of private assets, or a level-headed realignment of funding that rightfully belonged to the government?

Under the plan, Poland’s privately held open pension funds (OFEs) were required to transfer 153.15bn zł (comprised mainly of Polish State Treasury bonds), to the state’s own social security office, ZUS, in February. The assets represented some 51.5% of OFE holdings, and some commentators referred to the move as “uncompensated expropriation” while others simply called it “robbery”. A key part of Prime Minister Donald Tusk’s pension system overhaul, the operation reduced public debt by a nominal 130bn zł or 9% of GDP by EU methodology. Under the reform, treasury papers have been cancelled and the sums credited to the accounts of pension savers in ZUS. The OFEs have also been barred from investing in treasury bonds and Treasury-guaranteed fixed income securities, but face fewer restrictions on purchasing equities and municipal and corporate bonds.

The reform also made participation in the partially privatized portion of the system optional.

As a result of the changes, Poland’s public debt will amount to some 50% of GDP at the end of 2014 according to EU methodology, with annual borrowing needs lower by 20-25bn zł in the years 2014-2017, the Finance Ministry said. According to estimates, Poland’s general government debt was forecast at some 58% of GDP at end-2013 compared to 55.6% at end-2012. The pension fund reform bill was signed into law by President Bronisław Komorowski in late December but sent for review to the Constitutional Tribunal. The judges face a major challenge, as the government has already included the pension-fund changes in its 2014 budget, which will run a 4.6% of GDP surplus as a result of the asset transfer, according to a November forecast by the European Commission.

Prime Minister Tusk said recently that Poland would suffer “dramatically bad” consequences, including a steep

Constitutional?

Was the government’s pension reform – which effectively transferred privately held assets to a public entity – constitutional? The issue is hotly debated within Poland. Ultimately, Poland’s Constitutional Tribunal will have the last say.

The decision could have a profound ­effect on Poland's fiscal future.

spike in debt servicing costs, if the constitutional court were to strike down the reform. Although a recent poll has shown that 53% of Polish voters opposed the overhaul, there has been surprisingly little resistance on the part of OFE owners, which include top global financial institutions, such as Aegon, ING, Allianz, MetLife, Aviva, AXA, Assicurazioni Generali, and Nordea. “I can’t believe they let it exist for so long,” one pension fund executive told Poland Today.

“We charged twice the market rate in management fees and the money just kept coming in, because the system was obligatory.” Unsurprisingly, the executive chose to remain anonymous.

The OFE debt trap According to estimates, between 1999 and 2010, OFEs bought up

some 270bn zł worth of liabilities, representing roughly 43% of Poland’s public debt. The annual debt-servicing costs associated with the OFE alone totalled some 13bn zł or 1.1% of GDP. In short, Poland borrowed billions from the OFEs, which in turn invested the funds into government bonds and stocks that were to generate returns for future retirees.

The gains have been modest, while the country’s debt began spiking, particularly in the wake of the global financial crisis.

‘We charged twice the market rate in management fees and the money just kept coming in, because the system was obligatory.’

Empty promises Introduced in the year 1999, following a World Bank and USAID-backed campaign, the Polish pension reform was designed as a three-pillar-defined contribution system. The first pillar, managed by ZUS, was pay-as-you-go (PAYG), and the other two (open pension funds and occupational pension schemes) were fully funded.

The PAYG component as well as open pension funds were mandatory, and occupational pension schemes (which have never really taken off) were voluntary. Shortly after the new system was introduced, the government found itself in a tight spot, forced to finance payouts for pensioners covered by the old system while at the same seeing large amounts of future pensioners’ funds flow into OFE accounts.

The resulting gap was to be covered from privatization proceeds, but the latter proved to be gravely insufficient, forcing Poland to embark on unprecedented borrowing – which was often financed by the OFEs. The system simply seemed a poor fit for a country like Poland, whose national accounts had remained in the red for decades. The system, which was first introduced in Chile and Argentina, and then in a number of emerging economies that lacked the political and economic muscle to reject such a hybrid solution (the way for instance South Korea and Slovenia did) has been a goldmine for banking and insurance groups that invested people’s pension money charging high management fees and cashing in on transaction costs.

51

BUSINESS

The first country to pull out of this scheme was Hungary. Budapest chose to nationalize pensions, transferring all the resources from the second pillar back into the state-run system. Those who objected to the reform could stay in the open pension funds, but only a tiny fraction chose to do so. Other countries soon followed a very similar path.

Uncertain future

More than a decade ago, the OFEs represented a promise for millions of Poles who after decades of socialist rule had very little trust in the state and its institutions. It is now becoming painfully clear that they have been a very costly experiment for Poland and a source of considerable gains for domestic and international financial institutions.

However, even if the February asset transfer proves final, and Poland succeeds at averting an immediate debt crisis, the so-called pension overhaul does little to address the country’s long-term pension problems, which combined with its rapidly ageing population demographic, are a ticking time-bomb. According to simulations, the pensions Poland’s 30-year-olds can hope to receive one day under the current system (with or without the OFEs) will be laughable. At the same time, statistics show that hardly any Poles are saving money for retirement, not to mention that only a small fraction can actually afford to do so.

The government will have to address this issue by introducing reasonable tax breaks for old-age savings and do more to promote occupational pension schemes. The Polish pension system is in dire need of a major rethink, and the plethora of loopholes that exist – mainly in farmer and uniformed services pensions – will have to be closed.

It seems rather unlikely, however, that Polish politicians will exhibit much interest in such unpopular issues with a string of elections looming (for the EU parliament this year and national parilament in 2015) and no immediate threat of financial disaster. Although the ruling elites will not be there to witness the consequences of their political myopia, young voters cannot afford to lose sight of the big picture.

Otherwise, their autumn years may look very bleak indeed.

by Lech Kaczanowski

Lech Kaczanowski

is the editor of Poland Today's weekly newsletter, Business Review+. From 2002 to 2013 he covered business and economic news from Poland for Sweden's Bonnier Group and other Nordic media. A former Open Society Institute Fellow at Duke University in North Carolina, Lech has degrees in economics, sociology, and journalism.

52 business

A recipe for doing business better The World Bank’s head for Poland and the Baltic States Xavier Devictor tells Poland Today editor Andrew Kureth what Poland needs to change to make a leap in competitiveness

As part of our mission to advocate for a

better business environment in Poland, we aim to encourage the government to implement the solutions the country needs to increase its competitiveness. Throughout this year, Poland Today will be monitoring the progress Poland makes in terms of making it easier for businesses to thrive, including issues pointed to by the World Bank: getting electricity, obtaining construction permits, resolving insolvency and increasing innovativeness.

illustrations: Retrorocket, photo: Grażyna Myślińska (Forum)

In the 2014 edition of the World Bank’s Doing Business report, Poland rose three places in the ranking, to 45. Has Poland made substantial progress relative to other European Union states?

This year Poland was basically ranked in the middle of the EU pack, so there has been some relatively rapid improvement. Three years ago Poland was at the bottom of the EU pack. If you look at the period since 2005, Poland has made the most progress of any EU country toward the best performers under each indicator. We think this does indeed reflect the reality that the business environment has improved.

But that Poland is in the middle of the EU pack can be seen as a glass half full – because it has made such progress over a relatively short period of time – or as a glass half empty because 45 is only 45. We think that Poland should continue reforming with the aim of joining the first tier of the EU countries. That is, Scandinavia and the UK.

Where are places that Poland could improve?

Poland is doing relatively poorly when it comes to the ease of getting electricity and starting a business.

It could do much better when it comes to construction permits, insolvency and contract enforcement. So there is a

Indicator

Doing Business 2014 Rank

The World Bank’s annual Doing Business

Starting a business Dealing with construction permits Getting electricity Registering property Getting credit Protecting investors Paying taxes Trading across borders Enforcing contracts Resolving insolvency

116 88 137 54 3 52 113 49 55 37

number of areas where Poland can still make progress. We have been working with the prime minister’s office and a number of ministries to try to find practical solutions to improve not so much the performance, but the situation. This is not about trying to get a better score in the rankings, this is about trying to create a better business environment.

We are hopeful that if the government maintains its commitment, it will be able to continue making progress, especially because the type of reforms that we are talking about are administrative by nature. They are not politically loaded reforms. What we are talking about here is strengthening the supervision of electricity-distribution firms so as to make sure that when you ask for a new connection you get it in, for example, 30 days instead of say, 60 days. When you talk about construction permits, the challenge lies in making sure you get a response from the various offices in a reasonable amount of time. So again, these are not politically loaded issues.

But as I said, we see a strong commitment in the prime minister’s office.

Before we issued the report we had an opportunity to have a discussion with the prime minister and with his council of economic advisors. And it was very heartening to see that the prime minister took a genuine interest not only in the issue of where Poland was ranked but why it had placed where it did. We also saw interest in finding solutions and how quickly those could be implemented. So that was very positive. And once again, it was not about improving the ranking, it was about using the ranking to diagnose the areas where a specific effort should be made.

and how much money it costs for a company to obtain a new connection to the grid. So this basically requires a review of the administrative process and figuring out whether some of the steps could be expedited or carried out more efficiently. In this case, we see huge room for improvement. We also see some room for improvement on construction permits where regulations remain, in our view, overly complicated.

But Poland has to think about how to improve the business environment as a whole. And there we are very encouraged by government efforts on deregulation of professions. We have also been very encouraged by efforts to modernize the insolvency law, so that when a company goes bankrupt liquidation isn’t the only viable option. We are talking with the Ministry of Justice about how to allocate resources across the judiciary to make sure that the courts that have lots of cases have the means to handle them effectively. So some of these solutions could yield results relatively soon – such as the improvement in insolvency law. But some of them require a change of culture in some ministries, administration or the judiciary, and by their nature take more time.

Mixed bag for business report measures the performance of 188 countries across 10 indicators for ease of business operation. Poland ranked 45, behind the Baltic States, Scandinavia, the UK and Germany, but ahead of Luxembourg, Italy, Spain and Romania. Here is a breakdown of how Poland did by indicator.

If the issues are not politically sensitive, then why hasn’t more progress been made?

It is a matter of progress step by step, and I also think it is a matter of administrative inertia in some areas. These are things that take time to implement.

You have called Poland a “regional champion” when it comes to ease of doing business. Why? In these types of rankings, countries typically have ups and downs, but for Poland it has been ups and ups.

However – this could still be seen as just short-term improvement. I think what is really interesting is that over several years Poland is the EU country that has made the most progress towards the top tier. That differentiates Poland from a number of other countries in Central Europe. I think that is a reflection of how continued commitment by the government and its pragmatism – a practical sense of what can be done and how to do it – is making a difference.

Of the challenges that you mentioned, which ones do you think could be overcome quickly, and which ones will take longer to resolve?

You have to look at the question from two different aspects: You can look at how to improve in the ranking, and there we see the most room for improvement on getting electricity. That is all about how much time, how many procedures

‘Poland is the EU country that has made the most progress towards the top tier.’

Doing Business 2013 Rank

124 104 138 63 3 51 104 50 54 37

Poland is an EU laggard when it comes to innovation. How important is changing this when it comes to improving the business environment?

This is key for Poland because it is 24 out of 27 EU countries in terms of innovativeness [according to an EU ranking]. When we looked at the number of patents per million inhabitants it was actually very small. Poland had 8, whereas the EU average was 97. So it was an order of magnitude of difference.

But since Poland’s GDP is at 65% of the EU average, if Poland wants to continue to grow then innovation is clearly a very important agenda. Obviously, the Vistula River Valley is not going to become Silicon Valley tomorrow, but there are still a few years during which Poland can put in place what it needs to start developing innovation so that when it reaches 75 or 80% of the average EU GDP per capita – and therefore per capita costs, more or less – it already has the resources to start innovating.

interviewed by Andrew Kureth

Change in Rank

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Andrew Kureth

is editor of Poland Today. Originally from the United States, Andrew has been reporting on Poland for 10 years, specialising in topics related to business and economics. He has written for numerous international publications, including the Financial Times. He was editor in chief of Warsaw Business Journal for seven years. He has a degree in English from Kenyon College in Ohio.

54 Startup

Poland’s future in 3D The sky is the limit for Polish 3D printer firm Zortrax, thanks to a huge order from Dell

Poland made global tech headlines

Lech Kaczanowski

is the editor of Poland Today's weekly newsletter, Business Review+. From 2002 to 2013 he covered business and economic news from Poland for Sweden's Bonnier Group and other Nordic media. A former Open Society Institute Fellow at Duke University in North Carolina, Lech has degrees in economics, sociology, and journalism.

in February thanks to Olsztyn-based 3D printing startup Zortrax. The company has sealed a major deal with Dell Computers, whereby Zortrax will supply the computer giant with 5,000 of its M200 3D printers. The deal, said to be the largest single order the global home 3D printing industry has seen to date, will be completed in batches, the first of which is due to be shipped by the end of the first quarter of this year.

The Polish company behind the Zortrax, Gadgets3D, launched the M200 project on the world’s largest crowdfunding platform Kickstarter and reached their $100,000 goal on 21 June 2013. Last month, Zortrax completed fulfilment of the campaign by shipping the M200s to all 80 Kickstarter backers.

The Polish firm looks set to become a major player in the European market and, with Dell as a major client, potentially globally. At the moment, some 20 people are working full-time on the Zortrax project.

Zortrax advertises its M200 as the first home 3D printer and one that will change the nature and the future of home 3D printing. The user-friendly, cost-effective unit has a 7×8-inch build plate and can print objects of up to 488 cubic inches with ABS and Nylon.

It retails at just under €1,600 per unit, with shipping to European customers being handled from Poland, and orders to the rest of the world being managed from Hong Kong.

But what would any company, even one as large as Dell, need with 5,000 3D printers? Those in the know say that it makes more sense for designers who print large numbers of prototypes to operate many smaller printers at the same time rather than rely on a single unit with a larger build volume.

According to Zortrax, the printers will be used by Dell’s product development offices in Asia.

“I imagine a number of companies will be keeping an eye on Zortrax following this announcement – not least Makerbot (Stratasys) and 3D Systems from a competitive point of view; but also other large manufacturers – to see if Zortrax fulfils the Dell order competently with a view to following suit,” said Rachel Park from 3dprintingindustry.com

by Lech Kaczanowski

DEDICATED SOFTWARE, oUT-OF-THE BOX PRINTING 3D printing has exploded in popularity, to the point where technology writers seem to be tiring of covering the new systems that continually appear on the market. Nevertheless, the Zortrax system has been receiving rave reviews. The experts say that's because it boasts several qualities that set it apart.

First is the fact that the unit comes ready to print out of the box: no assembly is required.

That's unique for such products, which often come as a bag of parts and a set of instructions consisting of Google links. Second is that the developers have built their own software, Z-Suite, which was made from scratch for the system. The software can be downloaded from the firm's website, and doesn’t require the computer using it to be hooked up to the 3D printer unit, as is the case with some other software. Tech writers have given the software high marks for usability and functionality.

we introduced so many modifications that the final product is unique. We have a number of patents pending for our technical solutions. The most significant part of the project might be our firmware, the software that guides the printing process, and Z-Suite, our desktop software for preparation of 3D printouts. These two elements may not be obvious at first glance, but they are crucial to print quality.

In what way has the contract from Dell affected your business?

Dell is a key client for us. Thanks to this contract we are able to significantly bolster our production capacity.

It is also a major boost to our image, especially since we are aiming primarily at the B2B market. There are many 3D printer makers out there, but only a few of them offer products that live up to B2B standards. High-end professional models sell for tens of thousands of US dollars, whereas low-cost printers offer poor print quality and low reliability. The Zortrax M200 is an affordable 3D printer that is cheap to run, dependable, and enables the user to print complicated 3D models.

How do you imagine Zortax in two to three years?

Poland Today talks to Rafał Tomasiak, CEO and founder of Zortrax Where are your printers made and what production capacities have you got at your disposal?

Rafał Tomasiak: The printers are made in China. We are cooperating with factories that offer virtually unlimited production capacities. At the moment we are discussing orders for tens of thousands of units. We don't think these numbers are unrealistic, considering the global demand, especially among small and medium-sized companies.

Do you own full rights to the M200 design?

Yes, we are the authors. We started off with solutions that were available on the market but at the design stage

In 2014, we intend to produce and sell more than 5,000 printers and at least 30,000 spools of filament, besides the Dell contract. We are in talks with some of the world’s leading 3D printer distributors and if we establish cooperation, the sales result could go beyond our wildest dreams. Our goal is to become one of the leading global producers of 3D printers for small and mediumsized firms, although we are also open to cooperation with large corporations such as Dell. In their case, operating a larger number of cheaper printers may be more cost effective than relying on several pricey models.

Do you intend to remain independent?

Currently we are fully independent, but if the business continues to grow at its current pace we may need to change our strategy. We might decide to team up with an external investor if that enables us to gain a competitive advantage in the global market.

55

startup

‘At the moment we are discussing orders for tens of thousands of units. We don’t think these numbers are unrealistic, considering global demand.’

photo: Rafał Siderski

From left to right:

Karolina Bołądź (product manager), Rafał Tomasiak (CEO), Tomasz Drosio (business development manager)

56

Finance Minister Mateusz Szczurek

spoke to members of the German-Polish Chamber of Industry and Commerce earlier this year. The German chamber is currently carrying out the 9th edition of its Economic Survey.

BUSINESS

Carsten Nilsen,

French-Polish Chamber marks 20 years in Poland with series of events

The French-Polish Chamber of Commerce and In-

dustry is celebrating 20 years of operations in Poland this year.

Some of the largest events will be focused around Bastille Day festivities in July.

The French-Polish Chamber of Commerce and Industry (CCIFP) kicked off a year-long celebration of its 20th anniversary in Poland on 7 February with a gala held at the Sofitel Warsaw Victoria Hotel. The gala included over 450 guests and featured past and present presidents of CCIFP, politicians and business leaders from the largest French investor companies in Poland. CCIFP plans to take advantage of this notable anniversary by holding a series of events throughout 2014, geared towards promoting French businesses in Poland and the activity of the French Chamber, ultimately strengthening French and Polish economic cooperation.

Some of the larger celebratory events that CCIFP is planning include Bastille Day festivities such as a French ball on 12 July to bring together the French and Polish business communities, followed on 13 July by the recreation of a French village in Warsaw’s Saska Kępa district, which will promote French companies, culture and history. Then in the autumn, CCIFP will host the second edition of the Warsaw Debates – an international conference held at the Royal Castle in Warsaw, which brings together intellectuals, businesspeople, and politicians, as well as guests who are great enthusiasts of Polish and French culture. The great success of the previous edition was a result of the unique atmosphere, which enabled openness and the free exchange of viewpoints during the debates and backstage discussions.

photos: courtesy of the chambers

Chambers of commerce

There are a number of smaller events to promote French business in Poland planned throughout the year as well. A full calendar of events can be found on the CCIFP website, www.ccifp.pl

9th edition of German-Polish Chamber’s Economic Survey underway Economic Survey 2014, the 9th edition of the study by the German-Polish Chamber of Industry and Commerce, is currently underway, in conjunction with the International Group of Chambers of Commerce in Poland (IGCC Group), which is comprised of other bilateral chambers in Poland from Belgium, Britain, Canada, France, Germany, Ireland, Italy, ­Portugal, Spain, and Switzerland.

Results from last year’s survey boded well for Poland. According to the 2013 survey, 94% of foreign investors in Poland would choose Poland again as the location for their investment. Poland scored best of all countries in the CEE region. The country’s top-rated attractiveness factors for foreign companies were its EU membership, and its skilled workforce.

chairman of SPCC, believes that Scandinavian companies are now less interested in bringing manufacturing operations to Poland and instead are coming due to Poles’ high skill levels in IT and services.

US Ambassador to Poland Stephen Mull, Secretary of

State in the Ministry of Economy Jerzy Pietrewicz, and Joseph Wancer, chairman of the board of directors at AmCham, pose for a photo at an AmCham conference on EU-US trade.

Scandinavian-Polish Chamber celebrates 10th anniversary

AmCham backs ambitious trade agreement

Adding to the formidable list of important milestones in Poland this year is the 10th anniversary of the Scandinavian-Polish Chamber of Commerce (SPCC). Established in 2004 as a merger of four business chambers – Danish, Finnish, Norwegian and Swedish – SPCC, with its current roster of 350 members, has become one of the biggest bilateral chambers of commerce in Poland. Another unique aspect of the Chamber is that in 2011, it began expanding its reach outside of traditional Scandinavian countries in order to also include companies from other Nordic neighbours. Estonian and Icelandic companies operating in the Polish market, as well as Polish companies interested in the Nordic markets were invited to SPCC starting in 2011. Latvian companies began to join as well starting in 2013.

Since 1990, the American Chamber of Commerce (AmCham) has been actively encouraging and supporting American investors looking to take advantage of the wealth of opportunity and resources that Poland has to offer. AmCham has also played a role in a number of initiatives dealing with increasing and improving economic and trade relations between Poland and the United States. One of the latest initiatives that AmCham has been strongly promoting is the ambitious Transatlantic Trade and Investment Partnership (TTIP), a global agreement aiming to unify administrative, financial and legal regulations for the economic development of the US and EU markets. “The relevance of the partnership will not be limited solely to economics,” said Katarzyna Kacperczyk, undersecretary of state for non-European policy and public and economic diplomacy. “It will strengthen transatlantic relations and position of the EU and the US in the world.”

There are more than 2,000 Scandinavian companies registered in Poland representing the main sectors of the Nordic economy, such as energy, construction, logistics, telecommunications, chemicals, timber, as well as finance and banking. According to statistics provided by the National Bank of Poland, by 2010 the Nordic countries had invested a total of €9.48bn in the country. More than half of the total Nordic investment was made by Sweden (€5.1bn), and the remainder was divided between Denmark (€2.7bn), Finland (€1.3bn) and Norway (€0.4bn).

The past 10 years have seen SPCC grow and change along with Poland. While the initial Scandinavian investors looked to Poland primarily for manufacturing, Poland’s thriving IT sector and skilled workforce are what Nordic investors are looking towards these days. “The time of manufacturing [in Poland] is over to some extent – now it’s much more IT and service-orientated companies interested in coming here,” said Carsten Nilsen, chairman of SPCC. “I can see Polish IT doing a lot of these jobs that call for skilled workers – they’re here. Plus I think Polish people generally tend to favour the laid-back management style and upward mobility that a lot of Nordic companies provide.

Poland plays an important role in the TTIP negotiations, since it is the biggest recipient of American direct investments in Central Europe and is a crucial link in the supply chain on the continent. According to specialists, the agreement could change the dealing profits between Poland and the US by 30%. In light of this, on 7 February AmCham hosted one of the largest TTIP conferences in Europe to date at the Warsaw Hilton, which saw upwards of 300 participants, including many high-ranking government officials and business leaders.

As the implementation of TTIP is expected to facilitate the dynamic growth of ventures, AmCham is fully committed to its promotion.

“High customs duty, mutual non-recognition of attestations and certificates and complicated procedures hamper trading and create barriers mostly for small and medium-sized enterprises. Our goal is to make Polish business realize how beneficial this partnership is,” said Joseph Wancer, chairman of AmCham’s board of directors.

by Cynthia Naugher Sklodowski

SPECIAL FOCUS on REAL ESTATE

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SPECIAL FOCUS ON REAL ESTATE

A special section on the opportunities and challenges in Poland's real estate market for the MIPIM real estate fair in Cannes, France

Polish real estate investors: staying home Poland’s major investors in real estate have little reason to expand beyond the country’s borders.see page 58

KEY DATA ON POLAND’S REAL ESTATE MARKET Largest lease deals, rental rates, vacancy, development. see page 60

Primetime Warsaw The second edition of Poland Today's conference on Warsaw as an international metropolis takes place on April 3. see page 62

Combining business with leisure Poland Today speaks with Jeroen van der Toolen, managing director for CEE at developer Ghelamco, about the company’s plans for development in the Polish office and retail sectors. see page 64

As market picks up, new investors turn to poland Commercial investment hit pre-crisis volumes last year, and now players from East Asia and the Middle East are looking to get in on the game. see page 66

In discussions with players in Poland’s real estate market, one common refrain can be heard again and again: Poland is now one of the most attractive markets in Europe. The interest from investors is directed at London and Paris, as well as the German and Polish markets.

Investors from the Middle and Far East who previously had shied away from central Europe are now, albeit slowly, looking to enter Warsaw. Once they invest in Poland’s capital, they then set their sights on the regions. It’s because Poland’s market offers so much opportunity that Polish investors are sitting tight at home, and are not venturing out into the wider region (p. 58). Indeed, last year commercial transactions in the country reached over €3bn, the best year since 2006 (p. 66). There are challenges, however. The redevelopment of historical buildings – of which there are many – require close cooperation with city officials ­(p. 72) and land claims are hindering investment in Warsaw (p. 76). The experts, however, are confident that those challenges can be overcome – read what they have to say in the numerous interviews with them we present in this special section.

PKP’s land: untapped potential Poland Today talks to Jarosław Bator, managing director for real estate at Polish State Railways, about the company’s properties and prospects for cooperation with private investors. see page 68

Strength in local markets Poland has emerged as the major market in the region, with some of the most attractive risk-reward opportunities in regional cities. see page 70

Destined to cooperate Cooperating with the officials who protect historic buildings can be difficult, but getting them involved in a project early can make all the difference. see page 72

Prestigious, historic and downtown Kulczyk Silverstein Properties has its sights set on investment opportunities in Warsaw. see page 74

Warsaw trapped in the claim game The swelling number of property claims are obstructing real estate investments in the capital. see page 76

Amazon’s Polish ‘game-changer’ Amazon’s construction of three warehouses in Poland marks a new era of investment for the region, experts say. see page 78

High-street hangup Warsaw greatly needs a strategy for the development of high-street retail. see page 80

Adam Zdrodowski, Poland Today’s real estate editor, takes an in-depth look at the landscape of Poland’s property market.

58

Poland’s major investors in real estate have little reason to expand beyond the country’s borders

photo: Echo Investment, GTC

SPECIAL FOCUS ON rEAL ESTATE

Polish real estate investors: staying home

The Galeria Wilanów project,

pictured here, along with the Galeria Północna shopping centre scheme in Warsaw are the two most important projects for Globe Trade Centre (GTC) in the region, company officials say.

Polish real estate investors have not been particularly active in the markets of Central and Eastern Europe in recent years. Even in Poland their share of the total investment volume remains negligible. Property experts say that legal regulations are among the factors to blame. The situation looks a bit different when it comes to Polish and Poland-based commercial and residential developers, some of whom are now involved in or are planning projects in the CEE region.

Special focus on real estate

Absent investors Since the beginning of the global economic crisis, Polish investors have been almost completely absent from the commercial property markets in the Central and Eastern Europe region.

There are no signals that something will change in this regard in the near future. Actually, the situation was not much better before the year 2008, said Marcin Mędrzecki, associate director, CEE investment services at Colliers International. According to him, a major reason for this is the attractiveness of the domestic property market.

“The key question is: Why invest in CEE countries if you can invest in Poland?”

Mędrzecki said. He noted that Poland is not only the largest, but also the fastest growing and the most liquid commercial property market in the region.

Apart from Warsaw, investment opportunities exist in a number of regional cit- HB Reavis expanding in Poland ies, Mędrzecki said. Łukasz Lorencki, a surveyor in the The attractiveness of the commercial propcapital markets group at Cushman erty market in Poland is reflected by the expan& Wakefield, pointed out that in recent sion in the country of HB Reavis, one of the largest developers in the Central and Eastern years the total value of investment Europe region. The company, which originated transactions signed in Poland has in Bratislava, Slovakia, entered Poland a few been higher than the total value of all years ago and has so far completed one office the investment transactions signed in project in Warsaw. Construction on two other office schemes in the city is underway, with HB the other countries in the region. For Reavis planning to launch several other investinstance, last year Poland accounted ments in the near future. HB Reavis’ investfor approximately 55% of the total ments that are planned and under-construction value of the investment transactions in Warsaw comprise a total of approximately 300,000 sqm of leasable space, said Stanislav signed in CEE, while the Czech Republic Frnka, the company’s CEO for Poland. He addaccounted for 28% and Hungary for ed that Warsaw is now the most attractive just 7%, Lorencki said. Unlike the property market in the CEE region. HB Reavis other countries of Central and Eastern is active in Bratislava, Prague and Budapest, but the scale of its operations is so large that the Europe, where investor activity is Polish capital is a natural destination for the mostly focused on the capital cities, company’s expansion, Frnka said.

Poland has well-developed regional office, retail and, especially, warehouse markets. As a result of this, the market in Poland can boast of a better availability of attractive properties, as well 2008-2013, the share ranged between as a better liquidity of the whole com- 3% and 10% (between €60 million and mercial real estate sector, Lorencki said. €220 million annually), which has to On the other hand however, be seen as a very modest result for Mędrzecki pointed out that even in a leading economy, Mędrzecki added.

Poland Polish investors have not been This is largely because pension funds very active in recent years. Last year, in Poland are not allowed to invest in for instance, they accounted for just the property market. Besides, most of around 6% (approximately €190 mil- the large Polish entities are not active lion) of the total investment volume in the investment market, with PZU in the country, he said. In the years Asset Management being one notable

While Polish investors are still only

active locally, some Polish developers are expanding abroad.

Echo Investment is one such Polandbased developer.

Its Korona scheme in Brasov, Romania (right) will deliver 35,000 sqm of gross leasable area when completed.

GTC was founded

and has its headquarters in Warsaw, has long been active outside of Poland. Still, the Polish market remains very attractive. Pictured left is the firm’s Galeria Północna project in Warsaw.

‘The key question is: Why invest in CEE countries if you can invest in Poland?’ exception. One cannot expect Polish investors to become more active in the CEE markets as long as the scale of the activity of those entities in the domestic commercial real estate market does not increase significantly, Mędrzecki said.

Active developers The situation looks a bit better when it comes to developers. Outside Poland, Warsaw Stock Exchange-listed Echo Investment, for one, is mostly focused on two shopping centre projects in Romania and Hungary. The Korona scheme in Brasov, Romania and the Mundo development in Budapest will respectively comprise 35,000 sqm and 37,300 sqm of GLA, said Marcin Materny, director of the shopping centre department at Echo Investment.

For its part, Warsaw Stock Exchangelisted Globe Trade Centre (GTC), which was founded and is based in the Polish capital (though admittedly it does not represent Polish capital), is now active in a number of countries in the CEE and SEE regions. The company is currently involved in projects including Prague Marina Office Center and Saska Office Park in Prague, while its planned office schemes include Szeremi Gate Towers and Renaissance Plaza in Budapest.

Jacek Wachowicz, leasing and sales director and member of the management board at GTC, said that the two

key projects for the company in the sory at Reas, does not expect other region are now two new shopping Polish residential developers to malls in Warsaw – Galeria Wilanów decide to expand abroad. Compared and Galeria Północna. “Also outside with the retail and office market Poland, we are developing innovative segments, housing markets are typiprojects including Ada Mall in Belgrade cally perceived as local markets, and Green Dream and Ana Tower in he said. “This is particularly true for the Bucharest. We are also working on demand side, but also for the supply another office project in Belgrade,” side. Many large residential developWachowicz said. ers are traditionally focused not only Some Polish residential develop- on one country, but exclusively on ers have been talking of expansion one city,” Mendel added. abroad. Atal, one of the biggest comAdmittedly, during the great houspanies in the sector has revealed plans ing boom in the early 2000s, many to build a residential project in Prague. residential developers expanded Atal is one of the three largest residen- their activities to new markets – both tial developers in Poland and is growing to other Polish cities and abroad. There rapidly in five regional markets in the are also several residential developcountry, said Mateusz Juroszek, vice ment companies, financed primarpresident of the management board at ily by foreign capital, which are active the company. He added that the plans not only in Poland, but also across the to develop a project in Prague do not CEE region, Mendel pointed out. result from the need to expand abroad “Nevertheless, the current trend shows but from the geographical proximity a clear focus on the Polish housto the Czech market. Atal is based in ing market. Warsaw and the largest Cieszyn, in southern Poland, which lies regional cities are perceived as havcloser to Prague than to Warsaw. The ing the most attractive residential firm is very active in its home region markets to invest in,” he said. Mendel of Silesia. The stability of the developer added that real estate funds are now market in Prague is also of crucial signif- looking for investment opportunities icance. “All these factors make Prague in the residential market in Poland. a natural destination for expansion for “The focus is on company buyouts, land purchases, joint venture partnerAtal,” Juroszek said.

Maximilian Mendel, associate ships and mezzanine finance,” he said. director for CEE research and adviby Adam Zdrodowski

Echo Investment’s Mundo development in Budapest

will bring 37,300 sqm of gross leasable area to the Hungarian capital.

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Special focus on real estate

Special focus on real estate

Key data on Poland’s real estate market Largest lease deals, rental rates, vacancy, development

Residential developers buying more land in Poland

Largest office lease deals in 2013 Location

Tenant

Area (sqm)

Project

The investment activity in the market for building plots in Poland picked up significantly in 2013, with residential developers having accounted for much of the new demand, according to Jones Lang LaSalle. The second half of last year saw an increase in the demand for new apartments that was generated by factors including low interest rates.

Many of the large residential developers notched up record sales in the period.

As a result, they are now seeing their apartment inventories become gradually depleted, said Daniel Puchalski, director of the land advisory service for CEE at Jones Lang LaSalle.

Warsaw Warsaw Warsaw

Polkomtel Getin Holding Urząd Rejestracji Leków Bank Zachodni WBK Getin Holding

22,680 18,850 13,000

Konstruktorska Wola Center Adgar Park West

11,800 11,700

Atrium 1 Sky Tower

Warsaw Wrocław

Over 90,000 sqm of office space is scheduled to be delivered in Warsaw in Q1.

Prime retail rental prices in Poland Q3 2013, € / sqm / month

Prime office rental prices in Poland Q4 2013, € / sqm / month

Warsaw (city centre) Silesia Warsaw (suburbs) Kraków Poznań Szczecin Tri-City Wrocław Łódź

Warsaw (CBD) Warsaw (non-central) Wrocław Kraków Poznań Katowice Szczecin Gdańsk Łódź

87.00 45.00 43.00 42.00 41.00 40.00 39.00 38.00 30.00

25.00 16.50 15.50 15.00 15.00 14.00 14.00 14.00 13.00

‘The Polish economy is expected to expand by as much as 2.8% this year. As a result, the country is now attracting foreign capital and corporations that are increasingly deciding to move their headquarters to Warsaw or expand existing offices there.’

– Stanislav Frnka CEO for Poland at HB Reavis

Warsaw office Vacancy rate to hit 14% this year Increased developer activity will drive the office vacancy rate in Warsaw up to around 14% by the end of this year, according to a recent report by the global real estate services firm Savills. The vacancy rate in the Polish capital already rose to 11.7% last year, due to the limited net office space absorption that amounted to just 155,000 sqm and was 20% below the long-term average, the study said. However, in the Mokotów district of Warsaw, the largest office hub located outside of the downtown of the city, the vacancy rate is expected to decrease from the 12% recorded at the end of 2013 to approximately 8% at the end of this year. Themain cause for this will be limited new supply.

Record industrial space lease levels in Central Europe More than 4 million sqm of industrial space

was taken up in Central Europe last year, the best result to have been recorded in the region in the last 20 years, according to a recent report by Cushman & Wakefield. Ferdinand Hlobil, partner and head of industrial in Central Europe at the company, said that the CE region, defined by the firm as comprising Poland, the Czech Republic, Slovakia and Romania, is benefiting from the shifting of production from Western Europe. In Poland, approximately 2.14 million sqm of industrial space was leased in 2013, with net absorption having amounted to 290,000 sqm. The Warsaw market was the most active – 24% of all transactions were signed there.

62 event

conference & cocktail party

Primetime Warsaw II 3 April 2014 | Conference Center Muranów | The Museum of the History of Polish Jews, Warsaw

Conference programme 8.00 – 9.00

Registration and coffee 9.00 – 9.15 Welcome: Richard Stephens, Publisher, Poland Today and Tomasz Andryszczyk, Primo Corporate Advisory 9.15 – 9.30

How to finance Warsaw’s infrastructure development: Key goals and their financing structure Warsaw’s infrastructure priorities for the short, medium and long-term, and how they will be financed.

P rofessor Hanna Gronkiewicz-Waltz, Mayor of Warsaw

9.30 – 10.00

How will the National Urban Policy help shape Warsaw?

What can cities expect from the 2014-2012 EU funding perspective, especially when it comes to the National Metropolitan Policy?

Which kind of investments will be supported most heavily? How will Warsaw specifically benefit from its share of funding?

Sky-high funding levels for infrastruc-

Elżbieta Bieńkowska,

ture will flood into Poland. How can Warsaw best take advantage of the boon?

Deputy Prime Minister, Minister of Infrastructure & Development

Warsaw Mayor Hanna Gronkiewicz-Waltz will speak

on issues facing the city, including the best ways to finance infrastructure developments.

63

event

10.00 – 10.45

Infrastructural and Social Challenges for Warsaw within the new European Funds Perspective 2014 -2020 Elżbieta Bieńkowska,

Deputy Prime Minister, Minister of Infrastructure & Development P rofessor Hanna Gronkiewicz-Waltz, Mayor of Warsaw

The conference brings top decision makers together to find ways to meet the challenges the city faces as it becomes a global metropolis

A discussion of the points raised in the speeches given by the Mayor and the Deputy Prime Minister.

10.45 – 11.15

Coffee break 11.15 – 12.00

How the second Metro line will reshape the urban, social and commercial landscape of Wola and Praga

The second Metro line is the single biggest infrastructural investment implemented directly by local government authorities in Poland.

What social, urban and commercial implications will it have for these up-and-coming districts? How can the commercial sector contribute and work with the public sector?

Michał Olszewski, Deputy Mayor of Warsaw Jeroen van der Toolen, Managing Director CEE, Ghelamco Andrzej M. Chołdzyński, AMC Architects 12.00 – 13.00

Commercial Real Estate in Warsaw ffice presentation O

by BNP Paribas Real Estate Retail presentation

by Colliers International

OFFICE: how much office space can the capital city absorb? There’s a lot happening in the Warsaw office market, and it’s catching the attention of global investors. Can demand match supply? Where are the new tenants coming from? How do city centre locations compare to edge-of-city destinations? Could the locations of office buildings diversify, to include less established districts such as Praga and Ursynów?

RETAIL: The retail sector is facing pressure from the increase in online shopping. What

effect is this having on the Warsaw market?

In which locations is demand for retail growing, and in which is saturation an issue? Older shopping centres are undergoing not only renovation, but regeneration. As well as constructing centres, are developers turning into managers, adding value for the investor? arosław Zagórski, Commercial & Business J Development Director, Ghelamco Leszek Sikora, Managing DIrector, ECE Projektmanagement Waldemar Lesiak, Deputy CEO, Echo Investment Plus senior figures from BNP Paribas and Polskie Kolejowe Państwowe (PKP) 13.00 – 13.45

High street retail in Warsaw – a momentum building?

Urban regeneration projects in Warsaw, as well as urban planning initiatives, lack a high street component. There is a growing will, both by the city authorities and the retail sector, to remedy this and introduce shopping into key streets of the Polish capital city, creating real alternatives to shopping centres as shopping & leisure destinations. Will there be follow-through?

Michał Olszewski, Deputy Mayor of Warsaw Piotr Krawczyński, Managing Director & Board Member, Kulczyk Silverstein Properties Marta Machus-Burek, Director, Colliers International 13.45 – 14.30

Networking buffet lunch 14.30 – 15.00

Green pricing, green funds and green diversification – is there an added value for property, portfolio and occupier level?

Professor Bienert will explain the latest re-

search results of different institutions regarding the pay-off of green buildings. This will include trends in sustainable property investments as well as green funds, and show what impact corporate responsibility might have for publicly listed real estate companies.

Professor Sven Bienert, MRICS, Professor of Sustainable Real Estate at the University of Regensburg and ULI Sustainability Fellow 15.00 – 15.30

Panel discussion and Q&A about sustainable construction and its financial implications on the building’s performance.

15.30 – 16.00

Coffee Break 16.00 – 17.00

Transit-Oriented Development Strategies for Warsaw

Transport infrastructure is a driver of urban development. How to search for synergy between urban and transport planning?

Is Warsaw ready for the a new wave of transport development? Which parts of the city will flourish thanks to transport development projects in the coming decade? To what extent are car parking facilities a priority for city authorities?

Mieczysław Reksnis, Director, Department of Roads and Transport, City of Warsaw Adrian Furgalski, Member of the Board, Zespół Doradców Gospodarczych TOR (a transport advisory company) Andrzej Brzezinski, Trans Eko (a transport engineering consultancy) Łukasz Puchalski, City of Warsaw 17.00 – 18.00

The art of placemaking: how to reshape urban spaces, large and small

The city is not only about buildings but also about the spaces between them. How to make urban spaces work, attract citizens – old and young – to them, and make Warsaw a great place to work in, live in and visit.

Patryk Zaremba, Forum Rozwoju Warszawy (The Forum for the Development of Warsaw) Marcin Mostafa, President of the Warsaw branch of SARP (Polish Architectural Association) Moderated by Tomasz Andryszczyk, Partner, Primo Corporate Advisory

Cocktail Party 18.00 – 21.30

Cocktail Party at the Museum of the History of the Polish Jews

High street development: one of the

issues up for discussion at the conference will be how to create a real alternative to shopping centres.

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special focus on real estate

Ghelamco is a part-

ner of Poland Today’s Special Focus on Real Estate.

Combining business with leisure Poland Today speaks with Jeroen van der Toolen, managing director for CEE at developer Ghelamco, about the company’s plans for development in the Polish office and retail sectors

‘It is worth preparing projects not only for business, but also for the city and its inhabitants.’

Work on your flagship project in Poland, the Warsaw Spire, is proceeding apace. What is the tenant interest in the scheme and when do you expect to sign the next large deals in the complex?

Indeed we are now full steam ahead with the construction and the commercialization of Warsaw Spire. Currently we have approximately 50,000 sqm of space under negotiation, both for the tower and one of the side buildings, because the other is almost completely leased out to EU agency Frontex.

We hope to share good news this year.

The neighbourhood in which Warsaw Spire is located is now becoming one of the main office hubs in the Polish capital. Is the large competition in the area already a major problem for developers?

Jeroen van der Toolen, managing

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director for CEE at developer Ghelamco, says that while his company is keeping an eye open in Poland’s regions, its main focus will remain Warsaw.

I would say that it is not yet an office hub, but I believe that with all the office, retail and residential developments it will become a new, modern and multifunctional area of the capital, combining business with living and leisure.

The part of the Wola district in which the Warsaw Spire is located will soon be dominated by office buildings. What can be done to also make the area attractive for the inhabitants of Warsaw?

to business and to the city. People are spending more and more time at work and afterwards they need a place where they can relax and meet with friends – to keep their work-life balance.

Warsaw Spire, as the first project that represents this approach, will become the centre of a newly emerging business-leisure-living area. We hope that other developers will follow suit.

In fact, it is already visible that Rondo Daszyńskiego will significantly change within the next few years – as a result of such investments as the revitalization of Norblin and the former Browary Warszawskie site, the next phases of the 19. Dzielnica residential project, or the project on the Centrum Jupiter plot. I must also mention our Sienna Towers project. It will offer office and retail space and it will be directly connected with the subway stop via an underground passage. It will be exciting to see how this part of the city changes from a post-industrial area into the most modern district of the city, offering so much to Warsaw inhabitants.

I would also like to add that Warsaw Spire is not the only example of Ghelamco’s efforts in creating urban space. Last year we delivered Ghelamco Arena in Ghent – the most modern stadium in Belgium in the last 40 years. The stadium, along with the neighbouring offices, hotel and retail amenities, has created a new district of the city, combining the work and leisure functions. Recently, Ghelamco Arena was chosen “The Stadium of 2013” in a vote of people from 105 countries.

This clearly shows that it is worth preparing projects not only for business, but also for the city and its inhabitants.

Our project is the most important urban redevelopment in the quarter since the World War II and, in fact, the only example of Warsaw gaining new, coherently designed and carefully prepared space on such a scale. There are nice areas in Warsaw but only few destinations are free of car traffic and offer several opportunities to spend time.

Therefore we have decided to create You are planning several other such an urban space within the Warsaw towers in the same area, includSpire complex – to make it a living part ing a mixed-use complex on ul. of the city. The Warsaw Spire build- Sienna. What is the status of the ings are designed around a vast public schemes and when could consquare, open for Warsaw’s inhabitants. struction on them be launched?

We want it to be the new business In the Rondo Daszyńskiego area we and meeting place of Warsaw, so the have secured a few plots and we are square will be filled with restaurants, working on some new projects there. cafés, benches, greenery, ponds, artis- The mentioned Sienna Towers is the first tic installations, and an amphitheatre one we plan to launch. It will be the only for artistic events. We think that this is investment at Rondo Daszyńskiego the right direction for commercial pro- with a direct underground connection jects – to combine the office and public to the underground stop there, and functions, which is very beneficial, both therefore it has already gained inter-

wola rising The area around Rondo Daszyńskiego in the Wola district of Warsaw has been

increasingly attracting office developers in recent years. The area is located close to the downtown of the city, still offers plenty of undeveloped land and a stop of the second underground line is expected to be opened there later this year. Several more office projects are expected to launch soon.

Nevertheless, when it comes to supply we must remember that many announced investments will not be delivered in a short time period. Many of the newly presented projects do not even have a building permit, many of those with a building permit will not be started until a significant prelet level has been obtained. So I would not assume that we will have a huge oversupply in Warsaw within the next few years.

You have been mostly focused on Warsaw in recent years. Is Ghelamco now planning any new office projects in the regional cities in Poland? photo: Ghelamco

Yes, definitely Warsaw is and will be a primary market for us. But we are constantly researching the regional markets and seek new, conveniently located plots.

est from office tenants and retailers.

As for the schedule, it is now too early to declare anything, but it may happen that we will start this project sooner than anyone expects.

Ghelamco is now also working on two major developments in downtown Warsaw – at the Grzybowski Square and in the area around the Gdański railway station. What will be built there?

Those projects, both mixed use, will be the next ones which will revitalize the city and create new public space.

We are working very hard on both of them and will present them to the public soon.

Will you still be active in the Mokotów district where you have developed a number of projects to date or do you agree with those who say that the location has already become too congested and less attractive to tenants and developers?

Mokotów is still a very good location for offices, with great public transport infrastructure and a wide range of amenities. We intend to keep our interest in the further development of that district. I can agree that there is a problem with congestion in some parts of the area, but looking at the commercial and financial success of our

Mokotów Nova, I will claim that there is still space for good projects. It is just a matter of a carefully chosen location.

The mentioned congestion issue is also easy to solve – in fact it is just a matter of two investments in road infrastructure: the connection of ul. Suwak with ul. Cybernetyki and ul. Woronicza with the ring road.

I would also like to stress that tenants are still interested in Mokotów. The market will never be a monolith. There will always be tenants who would never move from the city centre and there will be ones searching for high quality offices outside the CBD. As I said, welllocated and well-prepared projects will have no problems finding tenants.

In general, how do you view the prospects for the office market in Warsaw in the near future? Are developers not launching too many new projects?

For the last few years Warsaw’s market has been noting a very high level of transactions and also the supply seems to be stable – in 2013 the volume of all lease agreements reached 630,000 sqm and there was 300,000 sqm delivered to the market. But definitely there is still room for many developments, because Warsaw, in comparison to other European cities, still has a very low ratio of office space per capita – only a little above 2 sqm.

Ghelamco has recently entered the retail market in Poland, focusing on the development of neighbourhood centres. What are your plans in that sector?

The projects with which we entered the retail sector differ from what is commonly constructed. We do not want to compete with developers who construct big shopping malls. We rather want to focus on niche projects dedicated to the local communities.

Our first investments will not be bigger than 7,000-12,000 sqm but their tenant mix, architecture and additional functions will carefully be adjusted to the needs of the clients. Therefore we will have a little different offer for Wilanów, Łomianki and Piaseczno.

Our projects will also have social functions, as we have agreed with the authorities in each location that the squares included in our projects will be used for local events. The first project that we will launch is Plac Vogla, which already has a valid building permit and a major tenant.

Are you planning to acquire any new plots for office or retail projects in Poland in the near future?

Every year we buy new plots and consistently look for good locations for offices and now also for retail, as we would like to make it a strong part of our activities in Poland.

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A view of what Warsaw’s Rondo Daszyńskiego

(facing north) will look like once Ghelamco’s Warsaw Spire project is completed. The Belgian firm has plans for several developments around the area.

special focus on real estate

As market picks up, new investors look to Poland Commercial investment hit pre-crisis volumes last year, and now players from East Asia and the Middle East are looking to get in on the game

photo: Deka Immobilien, Ghelamco, IVG, ECE, Union Investment

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Atrium 1 (left) was

acquired by Deka Immobilien from Skanska Property Poland in November last year for €94m.

The building, located at Warsaw's Rondo ONZ roundabout, offers 18,000 sqm of office space on 15 floors.

Mokotów Nova,

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(right) developed

by Ghelamco, was sold for €121m in September last year to Tristan Capital Partners. The scheme comprises two buildings with a total of 43,750 sqm.

Last year proved to be very good

ever-growing maturity of the market, prove difficult to reach the volume of Mirowski added. investment transactions recorded last The largest deals in the retail market year, because many of the best assets included the acquisition of Silesia City have been sold in recent years and will Center in Katowice by Allianz and ECE, not be for sale any time soon. the acquisition of Galeria Kazimierz in Investors are now mostly looking for Kraków by Invesco and the acquisi- prime office and retail assets, in good tion of the Charter Hall retail portfolio locations and generating stable rent

by Tristan Capital Partners. Altogether, revenues. They are also now slowly the retail sector accounted for €1.32bn beginning to show interest in non-core worth of transactions, according to properties. Renata Osiecka, managing Record levels Jones Lang LaSalle. Office deals were partner at Axi Immo, pointed to the The total investment transaction volume valued at a total of €1.06bn, with growing investor interest in the warein the country approached €3.3bn last the largest of them having been the house sector. Last year saw several year, representing a 22% y/y increase €127m sale of New City in Warsaw, portfolio transactions in the sector, the and exceeding the pre-Lehman lev- the company said in a recent report. largest of which was the sale of 50% els of 2007, according to Colliers Transactions involving warehouses, of the investment platform of SEGRO International. According to preliminary mixed-use properties and mixed port- to PSP Investments. This year we will data published by Jones Lang LaSalle, folios, and hotels were respectively see the demand for warehouses, which the total value of the deals which were valued at around €656m, more than have already attracted a number of closed in 2013 amounted to approxi- €280m and over €113m, JLL said. investment funds in recent years, grow even further. Investors will be focused mately €3.4bn, compared to more than on core projects in core locations, core €2.7bn a year earlier. This would be the Bright prospects best result since 2006, when the vol- For the near future Poland is expected projects with core tenants and added to maintain its position as the leading value projects, Osiecka said. ume amounted to over €5bn.

“Poland again maintained its posi- market in the region in terms of the tion as the leading commercial real investment volume, liquidity and avail- Active funds estate market in the region in terms ability of debt financing for core real That the investment activity in the comof the overall investment volume and estate product, Mirowski said. The aver- mercial property market in Poland will liquidity,” said Piotr Mirowski, director age total annual transactions volume in likely remain at a very high level this of CEE investment services at Colliers the mid-term should be in the range year is perhaps best indicated by the International. More than 60 transac- of €2.5-3bn, subject to the availabil- plans of some of the leading investtions were closed in Poland last year, ity of suitable real estate product and ment funds. Karol Bartos, portfolio including several large single-ticket the macroeconomic context, he added. and asset management director at and portfolio deals which highlight the Mirowski stressed that in 2014 it may Tristan Capital Partners, said that in for the commercial property investment market in Poland, with the volume of transactions reaching pre-crisis levels, according to data published by the leading agencies. This year volumes are expected to come in somewhat lower, but Poland is set to retain its leading position in the Central and Eastern Europe region, market analysts say.

Sector

Project

Value (€ million)

Seller

Buyer

Retail Retail Retail Office Office Office Industrial Industrial

Silesia City Center Galeria Kazimierz Galeria Dominikańska New City Mokotów Nova Senator H&M warehouse Żerań Park II

412 180 151.7 127 121 120 64 43.2

Immofinanz Globe Trade Centre, Aventus ECE ECI Ghelamco Ghelamco Invesco RE Area Property Partners, Apollo Rida Poland

Allianz, ECE Invesco RE Atrium Hines Global REIT Tristan Capital Partners Union Investment W.P. Carey SEGRO

Source: Colliers International

Royal Trakt Offices was acquired by IVG in July last year. The investor bought up several properties in Poland in 2013, spending a total of €86m. It plans to make more acquisitions in H1 this year.

Silesia City Center

in Katowice was sold to a consortium including Allianz, ECE and an unnamed Chinese investor in September last year.

At €412m, the transaction was the largest in the Polish market last year.

‘This is truly global capital, so expect to see China, South Korea and the Middle East supplementing the more traditional European capital.’

Poland the company will mostly focus on office and retail investment opportunities, including developments with a minimum investment ticket of €30m.

“Larger portfolio transactions would also be of interest and we would seriously consider partnerships with local partners looking to build an investment programme with us,” Bartos said.

In January, Tristan Capital Partners closed its new EPISO 3 opportunity fund, which had raised €950m and has a potential purchase power of €2.4bn.

The company is also completing the investment programme for the coreplus CCP III fund, which raised €420m in 2010. For its part, IVG has announced that it will make new acquisitions in Poland in the first half of 2014. In the second half of this year, the company will start building a new fund which will mostly invest in Warsaw. The Polish capital is a core market, remains one

Senator, an office

building in central Warsaw which offers 25,000 sqm of space, was acquired by Union Investment for €120m in May last year. Ghelamco was the seller.

pool of investors, who now come from such markets as Germany, the UK, the US, China and the Middle East or represent the Polish domestic capital, will continue to be a positive trend in the Polish market. Experts at Cushman & Wakefield echo that sentiment. “We absolutely see an increase in the number of investors looking at CE and especially Poland,” said James Chapman, a partner and head of capital markets in Central Europe at the company.

The firm expects to see new market of the most liquid markets in Europe, along with Paris, London and the entrants in each of the countries in the German market, and is characterized region in 2014, with some of the eviby a relatively easy access to capital dence for this anticipated during the and debt, said Maciej Zajdel, managing next two to three months. According director of IVG Poland. to Chapman, this year the market will “We are mostly focusing on the capi- witness a combination of new names, tal, which was and in the upcoming as well as new capital sources coming years will remain the main investment from around the world and channelled destination in the office sector, espe- by the established fund managers. “This cially for those clients of property funds is truly global capital, so expect to see which prefer stability and safety, such UK, US and German-based fund manas pension funds and insurance firms,” agers and equity from the US, Canada, Zajdel said. Last year, IVG, which owns China, South Korea and the Middle East 16 properties in Poland, acquired three supplementing the more traditional class-A office buildings in downtown European capital,” Chapman said.

Warsaw – Le Palais, Royal Trakt Offices “The diversity of capital under and the Feniks Office Building – invest- management has notably increased. ing a total of approximately €86m.

The result of this is the variety of deals that are now possible, with investors New investors going up the risk curve, as well as new Colliers International experts expect niches being focused on,” he added. that the growing diversification of the

by Adam Zdrodowski

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SPECIAL FOCUS ON REAL ESTATE

PKP is a partner

of Poland Today’s Special Focus on Real Estate.

PKP’s land: untapped potential Poland Today talks to Jarosław Bator, managing director for real estate at Polish State Railways (PKP), about the company’s properties and prospects for cooperation with private investors

‘PKP offers premises in very good locations, often in the very centres of cities.

These are sites which can be used for office and retail developments.’

Jarosław Bator,

Special focus on real estate

managing director for real estate at Polish State Railways (PKP), points out that most PKP properties are not burdened by zoning plans, and can therefore accommodate several types of investments.

and changes in the use of the land earmarked for railway-related purposes.

PKP has a very large real estate stock, one of the largest in Poland. We manage approximately 2,500 railway stations. Our stock also includes almost 30,000 apartments and 100,000 plots of land. Around 10,000 of those plots have commercial potential and can be earmarked for sale.

How large is investor interest in PKP properties, and is the interest also visible in smaller cities?

When it comes to developer projects on the largest scale, we are obviously mostly carrying out these in large cities.

These are mostly investments based on the special purpose vehicle model and involve developers developing PKPowned land. In this way, we have carried out the investments in Poznań and Katowice where, apart from brand new railway stations, new shopping centres have been developed. We can see a lot of investor interest in this kind of cooperation. On one hand, this is due to the attractiveness of the land owned by PKP. On the other hand, it results from the rebound in the developer market.

In smaller cities, we are implementing the so-called “Small Developer Projects.” Their goal is the development of land located in direct proximity to railway stations. We primarily want to earmark the land for retail developments. We are planning to carry out such investments in cities including Konin and Mińsk Mazowiecki. In the case of these kinds of projects, private investors are also very open to cooperation.

How much PKP-owned land could be sold to or developed by private investors in the upcoming years?

We have to mention two kinds of models here: the sale of properties (both plots and defunct railway stations and other unused buildings) and developer projects. In the latter model, PKP remains the co-owner of the land which is being developed by a private investor. Currently, the size of the land that we are going to develop through this method amounts to over 80 hectares, but this may yet change depending on the progress in the regulation of the legal status of the land

Which important railway stations in Poland could be redeveloped in cooperation with private investors?

As I said, due to the cooperation between PKP and developers, new railway stations in Katowice and Poznań have already been developed. We are also planning the construction of a new Warsaw West railway station, which will be located closer to Al. Jerozolimskie.

Such a location will help to better integrate the station with public transport. We would like the construction to be launched in the third quarter of this year. Besides, in the Polish capital, we are preparing to develop the Gdański railway station site.

Have you come up with an efficient model of cooperation for the development of new railway stations?

The completed investments in Poznań and Katowice, as well as the launching of new projects, are the best proof of the efficiency of our model.

PKP offers premises that have huge potential and are in very good locations, often in the very centres of cities. These are sites which can be used for office and retail developments. Hotels and even entertainment centres can be built on them. For many years, the potential of the sites was not taken advantage of.

We are changing that now.

Apart from railway stations, which attractive PKP-owned properties have a chance of being developed by private investors?

We are currently preparing several large investments in cooperation with developers. Here we can mention, for example, the development of attractive land in Kraków (near ul. Bosacka) and in Gdynia (near Międzytorze), as well as the area around the Świebodzki railway station in Wrocław and the Warsaw Main railway station.

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Can areas located above railway lines, for example along Al. Jerozolimskie in Warsaw, be developed?

When it comes to the areas along Al. Jerozolimskie, there can hardly be any talk of new developments there due to the fact that the Średnicowa railway line is very busy and because of the lack of certain legislation.

What is the procedure for planning and obtaining permits when it comes to the land owned by PKP? Usually the procedures related to the obtaining of the necessary permits are not different from the standard procedures applied in the case of these kinds of investments. As a rule, railway areas are not, because of their “closed area” status, covered by zoning plans, or the function of the land is not defined.

While preparing an investment, there is the need to exclude the land in question from what is defined as a “closed area” and to obtain a planning decision or to enact or change a zoning plan. While preparing our projects, we consult the local authorities. We want our investments to live up to the expectations of the local communities. For their part, the local authorities are usually interested in a change of the way in which our land is used, because of the location of the railway station areas in the centres of cities.

How large are your revenues from the sale of properties and what are the estimates for this year?

Last year we sold almost 400 properties, including both plots of land and buildings. We managed to sell all of them for a total of more than 200m zł.

This year we would like the sum to be more than 250m zł.

Warsaw’s new GdaŃski station PKP is now in the process of selecting

a private partner with whom it will develop a new Gdański railway station in northern Warsaw. The final decision on the matter could be taken in the upcoming weeks. Three entities – Ghelamco, Immobel and a consortium of Ymma Holding and Penta Investments – were shortlisted by PKP.

Three options:

three bidders have been shortlisted to redevelop the Gdański railway station in Warsaw: Ghelamco (proposed development left), Immobel (middle) and a consortium of Ymma Holding and Penta Investments (bottom).

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Special focus on real estate

Colliers International is

a partner of Poland Today’s Special Focus on Real Estate.

Strength in local markets Poland has emerged as the major market in the region, with some of the most attractive risk-reward opportunities in regional cities

‘The depth and variety of capital is growing and there is more opportunistic money [becoming active in the Polish market].’

Piotr Mirowski,

director of CEE investment services at Colliers International, says that more investors are paying attention to the opportunities in Polish regions.

Poland Today

sat down with Piotr Mirowski, director of CEE investment services at Colliers International, to discuss the commercial investment market in the country.

What’s the main theme in Poland’s real estate market today?

The general theme is well-known throughout Europe, but I think it is important to keep highlighting that Poland has emerged as the major market in the region and that it’s a mature market now which offers an interesting premium compared to Frankfurt, Paris or London. There is growing interest – not only in core assets. But the depth and variety of capital is growing as well and there is more opportunistic money.

This bodes well for the overall health of the market, because liquidity is growing.

A few years back, if you had a challenging asset, a B- or C-class asset, it would be difficult to sell. With the opportunistic funds coming in and actually embracing the opportunity to add value and reposition the asset – as long as the property fundamentals are OK – it’s highly possible. Another important development is the inflow of capital that hasn’t directly tackled the Polish market yet – I mean sovereign money – combined with capital from the Far East, although obviously it’s not coming in as strongly as into the Western markets.

Special focus on real estate

Can Poland absorb this amount of money? Is there enough product?

If you track the investment volumes since the collapse of Lehman Brothers in 2008, the average investment value is around €2bn per year. The main concern for the mid-term is the availability of product to sustain such a volume.

Either there will be second or third sales of assets already in ownership or the investors will move up the risk curve.

Where do we see the most demand for product, in terms of sectors and regions?

Office in regional cities has huge potential, particularly urban centres such as Wrocław or Kraków. Last year showed that investors are back again.

With stock in Warsaw almost sold out, and benchmark yields, particularly for long-term leases, you can secure a good institutional quality product

in Wrocław with a similar covenant at a premium, and this is something that attracts investors. It’s not as difficult to underwrite cities any more. Local governments are healthy. Wrocław stands out as the prime example, but also Kraków, Poznań and Gdańsk.

There is a significant amount of investment in service centres and knowledge centres in Poland at the moment. Is there long-term demand here?

For regional cities business-process outsourcing (BPO) definitely plays a huge part. You’ve got the perfect mix of competitive rents and qualified labour.

You have proactive local governments which are business-friendly – they really try to accommodate investors.

These Chinese or Middle Eastern funds – how comfortable do they feel investing in Poland? How well do they know the country?

I think it’s a learning curve. Retail has always been nationwide, but regional office is less well known. Warsaw is the obvious target at first, but once they get into the market they look beyond.

We’ve seen the massive acquisition of Silesia City Center (a retail scheme), which we understand was backed by Far Eastern capital. Dominant, modern retail assets are much easier to underwrite now, whereas office is more specific. But I think the story is there for office product and if you look at the critical mass building up it’s very encouraging.

What about tenant demand in regional cities? Is that keeping up?

Yes and it’s mostly driven by foreign businesses coming in or their relocation to regional cities.

How much is the growth in Polish businesses a factor for future decisions in the office sector?

It’s expected to grow, but for the moment I think it’s mostly driven by the relocation of functions to Poland.

What would you say to a German fund which says it would rather invest in a German city that it knows, than a regional Polish city that it doesn’t?

photo: Colliers International

I would say that the local markets in Poland are strong. The quality of the covenant is similar, so it’s really about buying into a growing market as opposed to a more mature one.

Of course there is a closing gap in prime yields between Poland and the mature Western markets, but I think the risk versus reward is still quite tempting. If you look at prime office yields you’ve got sub-4% in London’s West End or around 4% in Paris, and you’ve got Warsaw at 6-6.25% and further premium for regional cities. That’s in a market where you’ve seen investors enter and exit, so you’ve got liquidity, and regional cities such as Wrocław offer office buildings (such as Green Day, fully leased by Credit Suisse) which are not dissimilar to Western cities of a similar size in terms of technical quality and covenant strength. Also in terms of price per sqm, it’s tempting.

If you can buy a brand new product with long-term construction guarantees and a strong covenant in place at, say €2,700 per sqm in a regional city, it makes for a compelling business case.

Are these Chinese or Middle Eastern investors willing to pay over the odds for the product, like the Spanish did before the crisis?

If you want to enter the market and deliver a strong message you may have to compromise on pricing. The competition on the Polish market, particularly for the assets that generate longer lease terms, is intense. The sale transactions of the BOŚ Bank headquarters last year on behalf of Griffin and Europlan, and the sale of Atrium 1 on behalf of Skanska, showed strong competition among the core investors.

If there is a newcomer to the market this comes at a cost.

Every seller is looking for the certainty of closing, and such an offer would have to be considerably better for it to be underwritten. Owners tend to go for offers which aren’t necessarily the most attractive in terms of pricing, in exchange for the certainty of closing, as well as a track record of a given investor. This is something all sellers are looking for, particularly since the transaction cycle is at least six to nine months from the beginning of the process to final closing.

Does this search for “certainty of closing” mean that there are some red herrings, or closings that don’t materialize?

I wouldn’t say so, but one of the things that could slow a transaction down is debt financing, so every single time the all-equity buyers have advantage, and likewise you and I would agree that if we have a buyer that’s willing to close by means of equity, the difference in pricing would have to be significant to go with the leveraged buyer, where you have to wait a few months until there is debt financing while the bank does the due diligence.

What type of investor is the all-equity buyer?

The usual suspects – the German open-ended funds, but I think more and more investors, to the extent that they can, are trying to alter the strat-

egy and really try to close all-cash, and The competition if they need to, they proceed with refi- for certain assets, such as that for the nancing post-closing, but by doing that BOŚ Bank headthey give the owner the certainty that quarters in Warsaw they will not fail. last year, was strong They usually do it in parallel – they among core investors, said Mirowski. usually approach the banks while in "If there is a newexclusivity, however they clearly state comer to the market, to the vendors that the transaction it comes at a cost," he added. is not subject to external financing.

Our experience is that the buyers deliver, and there really has to be something insurmountable for the transaction to fall apart. It’s still a relatively small market and reputation is very important for any buyer. The top buyers want to make sure they have every opportunity to bid on other projects in the future and if something goes wrong in the course of due diligence, or they fail to close, then automatically this raises questions for the next transaction.

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Destined to cooperate Working with the officials who protect historic buildings can be difficult, but getting them involved in a project early can make all the difference

Building conservation officers in Poland The office of the building conservation of-

ficer exists in each voivodship in Poland. Also, the major cities in each region have their own building conservation officers who cooperate with the office of the voivodship building conservation officer. The duties of the building conservation officers include the conservation of historic properties, the making of registers of historic properties and the collection of information on those properties, as well as the promotion of knowledge about them.

BBI Development’s Centrum Praskie Koneser project is located

Special focus on real estate

in the Praga Północ district of Warsaw in a former vodka distillery. The revamped 19th century historic brick buildings and several new structures will include luxury lofts, modern office space and retail and service premises.

Cooperation between

private investors and building conservation officers in Poland is often viewed as a difficult and controversial issue, with single negative examples preventing some developers from taking on projects located in historic neighbourhoods. However, those developers who actually deal with historic property or property located in historic neighbourhoods maintain that what the market needs is simply good practices and a bit better dialogue between both sides.

“I am definitely a fan of the office of the building conservation officer,” said Robert Mandżunowski, CEO at real estate investor LHI. “I cannot imagine an aesthetic, modern city without clear historic roots.” In recent years, his company has completed two office projects located in the historic neighbourhood of ul. Chmielna in downtown Warsaw – Nowy Dom Jabłkowskich and Chmielna 25 – and is now planning more schemes there. However, Mandżunowski added that the cooperation of building conservation officers with private and public investors should be based on a code of best practices. This is what is still missing in Warsaw, he said. In his view, the lack of such a code often leads to situations in which the building conservation officer has to protect buildings of little historic value only because they were built before 1939.

Joanna Kowalska-Szymczak, investment director at Kulczyk Silverstein Properties, said that her company is actually looking for projects in historic locations despite the awareness of the high public expectations that are related to such schemes. Kulczyk Silverstein Properties’ portfolio includes properties on Małachowskiego Square, on ul. Mazowiecka and on Trzech Krzyży Square in downtown Warsaw, Kowalska-Szymczak noted.

Dialogue needed Building conservation officers are very demanding partners to talk to, which results from the specific nature of their job, said Mariusz Aleksandrowicz, a senior project manager at Jones Lang LaSalle. “It happens that the cooperation between the developer and the building conservation officer is not easy.

It happens that the interests of both sides are, in some aspects, contradictory,” he added.

The investor and the building conservation officer should initiate cooperation and exchanging information as early as the planning stage, said Krzysztof Tyszkiewicz, member of the management board at developer BBI Development. He admitted that the cooperation with the building conservation officer makes the design stage of a project longer, because architects

‘It happens that the interests of both sides are, in some aspects, contradictory.’ have to meet very strict formal requirements and come up with a detailed description of the planned work before applying for the building permit.

JLL’s Aleksandrowicz was of a similar opinion. He argued that getting the building conservation officer involved in a project at an early stage can only be beneficial for a project. “The developer should accept the fact that it is the building conservation officer who will have the last say and that it is his duty to preserve the historic heritage,” Aleksandrowicz said. “Developers should be well-prepared to talk with the building conservation officer,” he added.

According to Magdalena Ruta, a consultant at the project management and building consultancy department of DTZ, it is best if the cooperation between an investor and the building conservation officer starts before

the purchase of a historic property.

The positive, efficient cooperation of both sides at that early stage can significantly influence the final decision about whether the property in question should be acquired at all or not, she said. In many cases, the first meeting between the investor and the building conservation officer takes place too late, after the property has already been acquired and when the investor wants to present his plans. Then it often turns out that the plans are not in line with the building conservation officer’s guidelines and that construction will cost much more than was originally planned, Ruta said.

Tyszkiewicz also pointed to the need for better cooperation and mutual understanding during the construction phase. For instance, it could be good if building conservation officers could approve small project changes as work on a particular investment proceeds. The existing regulations do not tors. Cooperation will obviously work allow such changes to be made easily, differently if the proposed changes are but they are quite common in invest- small than if the investor wants to comments involving historical buildings, pletely demolish a property, Ruta said.

Tyszkiewicz said. As a result, invesDespite all their drawbacks, investtors usually have to go through a long ments in historical buildings are paradministrative process instead. ticularly rewarding – the ultimate It happens that the building con- effect makes up for all the effort and servation officer has only fragmentary time spent on polishing the details, knowledge about a particular historical Tyszkiewicz said. There are many exambuilding and its valuable elements are ples of successful cooperation between discovered only after construction has a developer and the building conservaalready started, said Ruta. She added tion officer from which both sides have that such situations can turn an inves- benefited and which results in a quality tor’s plans upside down, change the project. The renovation of the Bristol schedule and the cost of construction Hotel and the revitalization of Le Palais of a scheme and even lead to construc- in Warsaw are good cases in point. tion work being put on hold.

“It is a win-win for all – the developer, the investor, the building conservation Positive examples officer and, above all, the city and its Does the cooperation go better in inhabitants,” Aleksandrowicz said. some cities in Poland than others?

“Many difficult projects requiring According to Ruta, the quality of the close cooperation with the building concooperation between an investor and servation officer have been developed the building conservation officer does in Poland in recent years,” Kowalskanot really depend much on the location Szymczak said. However, she noted of a historic building in a particular city. that the schemes that are controverIt is very difficult to compare coopera- sial usually receive the most publicity. tion in different cities and say whether On the other hand, there is the need for there are some where the cooperation making investors aware of the fact that is especially smooth or especially dif- they should create a partnership with ficult, since each building and poten- building conservation officers, who are not in their line of work to harm develtial development is different. Much depends on the property itself, the pro- opers, Kowalska-Szymczak added. ject and the expectations of the invesby Adam Zdrodowski

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SPECIAL FOCUS ON REAL ESTATE

Kulczyk Silverstein Properties’

Mazowiecka 2/4 (left) will comprise 2,600 sqm of space.

The facade of thebuilding will gain a more urban character through the addition of classical architectural details and large, all-glass window panes on the ground floor.

LHI’s Nowy Dom Jabłkowskich

(below) features classical architecture that hearkens back to the construction styles from before World War II. The facade of the building is covered with stone and large glass windows, topped with wood.

photo: BBI Development’s, Kulczyk Silverstein, LHI

‘Building conservation officers are very demanding partners to talk to, which results from the specific nature of their job.’

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Kulczyk Silverstein Properties

is a partner of Poland Today’s Special Focus on Real Estate

Prestigious, historic and downtown Kulczyk Silverstein Properties has its sights set on investment opportunities in Warsaw

‘There is potential for the development of proper high-street retail in Warsaw.’

Edgar Rosenmayr

Special focus on real estate

is CEO at Kulczyk Silverstein Properties.

Piotr Krawczyński

is managing director at Kulczyk Silverstein Properties.

Poland Today sits down

with Edgar Rosenmayr, CEO, and Piotr Krawczyński, managing director, at Kulczyk Silverstein Properties, to talk about the development and investment plans of the company and the condition of the Warsaw office market

also depend on the process of commercialization. We are now in talks with a number of potential tenants interested in leasing space in Ethos.

The building will no longer be occupied by one large tenant but will rather be a multi-tenant property.

You have recently announced your plans to redevelop the former Holland Park office building in downtown Warsaw. What is the reason for redeveloping this relatively new project now?

Will Kulczyk Silverstein Properties be looking at opportunities to build an office tower in Warsaw? Are you now looking for land for such a project in the Polish capital?

Edgar Rosenmayr: Well, the property is not that new, it is already 15 years old. But, the opportunity to redevelop the former Holland Park office building, which we have renamed Ethos, has emerged now as the main tenant of the scheme. The ING group, has moved to another location. We want to take advantage of the situation – the redevelopment would not be possible if the main tenant continued to occupy space in the building.

Piotr Krawczyński: Also, we have obtained a planning decision which allows us to extend the building, so we want to take advantage of this and develop new space on the site. The proportion of office and retail space will change – there will be new office space but also a whole new floor will be devoted to high-street retail.

To date, the building has just had one retail floor and once redeveloped it will feature two.

When is construction on the Ethos development scheduled to launch and finish?

ER: Construction is scheduled to be launched in March or April, depending on the process of obtaining the building permit, and to finish in the last quarter of next year. However, this will

About the company Kulczyk Silverstein Properties (KSP) was

founded in late 2010 as a joint venture between Kulczyk Real Estate Holding, an entity belonging to a group founded by Poland’s richest man, Jan Kulczyk, and Silverstein Properties, a major American development company known for projects including One World Trade Center in New York. KSP develops and acquires office, retail and mixed-use properties throughout Central and Eastern Europe.

ER: This is possible, especially since Silverstein Properties has extensive experience in the development of office skyscrapers in the United States. We could certainly apply this experience in Warsaw. However, whether we will do this and when will ultimately depend on the market situation. The big disadvantage of skyscrapers is that they cannot be phased and thus they are by nature very risky investments. We are talking to land owners and looking at sites in Warsaw which could potentially house high-rise projects. There are many good locations in the downtown area of the city. However, many of the available sites are too small and very often they are also overpriced. We are now seriously looking at one particular opportunity to buy land for an office tower.

Apart from the potential skyscraper, which kind of office projects will you be focusing on in Poland in the upcoming years?

PK: Our strategy does not envision the development of office buildings in large numbers. We are not going to be present in locations such as the Mokotów district, but rather focus on prime locations in downtown Warsaw.

We are interested in the acquisition of existing buildings in prestigious historic locations in the city which can be redeveloped and transformed into modern office buildings.

In general, what is the market sentiment in Warsaw now and how do you view the prospects for the office market in the city in the next few years?

ER: The investment sentiment is certainly very positive, which is evidenced by the high investor activity and the sale of a number of large office buildings in Warsaw last year. There is good

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SPECIAL FOCUS ON REAL ESTATE

The Ethos building,

product in Warsaw and, significantly, some buildings are even sold before their completion, with the recent sale

by Skanska Property Poland of their Atrium 1 project being a good example.

We are a bit worried about the amount of the new supply of office space which is scheduled to be delivered in Warsaw within the next two years. It is relatively large and even with the Polish economy growing continuously it is not certain that the market will be able to absorb it in the short term. For developers it obviously means that there is more competition and that the leasing process will become more difficult. The pipeline for the years 2016-2017 seems to be much more reasonable.

formerly called Holland Park, is set to get a significant redevelopment, after the main tenant, ING, changed locations.

Kulczyk Silverstein Properties plans to increase both the office and retail space in the scheme.

Are you planning any purely retail projects in Poland?

ER: We are not excluding the possibility of developing purely retail projects in Poland. We are actually considering the development of a shopping centre in the greater Warsaw area where, we believe, the market is not saturated yet. Additionally, we would be interested in the development of other retail formats, including department stores, in the downtown of the capital.

Statistics show that there is still less quality retail product in Warsaw than in most other capital cities in Europe.

There is potential for the development of proper high-street retail in Warsaw – in fact, we see our Ethos project as a valuable addition to the highstreet retail map of the city. However, for now the existing facilities remain quite dispersed and the high streets in Warsaw suffer from problems including the lack of parking spaces.

The Plac Małachowskiego build-

ing is a redevelopment project by Kulczyk Silverstein Properties that included restoring a historic edifice and the development of a new, modern building. The complex offers 12,500 sqm of office space.

ER: This is all about opportunities.

We have not decided to invest a particular amount of money, this will ultimately depend on the decisions of our shareholders as new opportunities emerge. We are also looking at the major regional cities in Poland, they are attractive for developers and investors but so far the best business opportunities that we have identified have all been in Warsaw.

photo: Kulczyk Silverstein

How much are you planning to invest in Poland this year and will the investments only be in Warsaw?

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Investment held back: Monika

Special focus on real estate

Rajska-Wolińska, managing director at Colliers International, said that if barriers created by the claims were removed land transactions in Warsaw could increase by 30% and reach 2bn zł.

Investment volumes could reach €1bn annually, she added.

Warsaw trapped in the claim game A swelling number of property claims are obstructing real estate investments in the capital

claims to the land on which the schools sit appear, the district authorities are coming under increasing pressure to secure new premises for the facilities.

Claims are now also a major financial burden for the municipal authorities in Warsaw. It is estimated that the total value of the property claims in the city may amount to approximately 17bn zł. Last September, the compensationrelated obligations of Warsaw City Hall were valued at 644m zł. “There are no funds for compensation in the city budget,” Gronkiewicz-Waltz said. Cases in which the city could compensate in kind have mainly all been dealt with.

The remaining cases are more difficult.

“Easy compensation cases are already a thing of the past,” she said.

Obstacle to investment There is some hope that the problem will soon at least partly be solved by Polish MPs. The Polish parliament is currently Property claims are increasingly working on a law which would provide hindering the sale of land and buildings special funds for Warsaw to help the in Warsaw and may in the future put city pay its compensation-related obliinternational real estate companies off gations. According to the law, the Polish investing their money in the city, said capital would receive 200m zł annually participants in a recent debate in the starting this year. MP Marcin Kierwiński Polish capital. The claims are usually stressed that this would be the first law related to land-appropriation legislation of its kind in Poland. It will not address passed in communist Poland right after all the needs but will certainly give the end of World War II. As more and Warsaw some breathing space, he more such claims emerge and are rec- said. However, a comprehensive soluognized in courts, the process is nega- tion is now badly needed, because the tively affecting the property turnover property claims continue to have a in Warsaw. negative impact on the number of real estate transactions and the cost of Tangled web investment in Warsaw.

The issue is complex and multifaceted.

On the one hand, there are claims The property claims resulting from the on almost all of the plots that Warsaw communist times are a political, a finan- authorities would like to sell in the near cial and a social issue, Warsaw Mayor future, said Marcin Bajko, property Hanna Gronkiewicz-Waltz pointed out. management office director at Warsaw Over the last 25 years, there has been City Hall. On the other hand, the large no political consensus on the repri- number of claims (around 3,500 applivatisation of property that had been nationalized under communism.

Many of the buildings that have to be THursday breakfasts returned are historic tenement houses Śniadania Czwartkowe (Thursday where people still live. Moreover, the Breakfasts), are a series of debates organised claims also cover many public build- by IVG Poland, Colliers International Poland ings, including schools. For exam- and Dentons. The goal of the debates is to come up with a coherent vision for the development ple, almost all of the schools in the of Warsaw in the upcoming decades that will city’s Śródmieście district were built make the city competitive on a global scale on property which had been privately in terms of the attractiveness of its real estate, owned prior to the war, noted Wojciech quality of urban planning and functionality of its public areas.

Bartelski, the district executive. As more

‘There are no funds for the compensation in the city budget.’ cations for the return of confiscated property are now being processed in Warsaw) are making the acquisition of land in the city risky business. It is often difficult to determine the legal status of a given property. Doing the research is time-consuming and expensive.

Paweł Dębowski, a partner at the Dentons law firm, cited the case of a transaction in Warsaw valued at more than €100m which was delayed by four months because the buyer suspected there could be a claim on the property.

Maciej Zajdel, managing director of IVG Poland, said that closing a large transaction in Warsaw can take up to eight months. By comparison, in London similar transactions usually take a matter of weeks.

Put all of this together and it is increasingly difficult to convince investors that they should invest in Warsaw.

If the view becomes widespread that these property claims are making the city a risky market, investors will simply shy away, Zajdel said.

Were it not for these limitations, the volume of land transactions could increase by around 30% and reach a record 2bn zł, while the investment volume could rise to around €1 billion annually, said Monika RajskaWolińska, managing partner at Colliers International in Poland. Dębowski pointed out that the claims issue is a serious PR problem for some investors. Some companies would simply find it unacceptable for their name to appear in the media in the context of a property claim, he said. Whenever possible, investors should try to buy property claims from the heirs of the pre-war owners, said GronkiewiczWaltz. She stressed that often they don’t plan to develop anything on the properties that they manage to get back.

by Adam Zdrodowski

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Amazon’s construction of three warehouses in Poland marks a new era of investment for the region

photo: Marek Kaczmarczyk

SPECIAL FOCUS ON REAL ESTATE

Amazon’s Polish game-changer

Special focus on real estate

Global e-retailing giant

Amazon is due to begin operations in Poland this year. It was due to hold its latest round of employee recruitment beginning in early March, while the construction of three distribution centres is set to be completed this year. Though the almost half a million Amazon consumers in Poland will initially have to continue ordering products through Amazon’s British or German online sites, the products will soon be shipped from distribution centres in Poland.

The retail giant charged international developer Panattoni’s European branch with building over 200,000 sqm of logistics space near Poznań and Wrocław last year in a record-breaking contract for the Central and Eastern European real estate market. Construction of the centre near Poznań is due to be completed by mid-July with Amazon hoping to begin operations in time for the

winter holidays. Construction for the “We are very pleased that Poland is Wrocław centre is due to be completed regarded as a dynamic and evolving country that is conducive to investin October.

At the centre’s construction site near ment,” he said. At the end of his speech, Poznań in February, a cornerstone-lay- Florek presented Panattoni Europe with ing ceremony took place amid decid- a good-luck “Polish” brick, explaining, “I edly optimistic representatives from bring these to every construction site.

Amazon and the region. “Above all else, Until now, all the builds have been sucAmazon’s new centre means pres- cessful and without any delays.”

Amazon plans to employ 2,000 pertige,” said Tadeusz Czajka, mayor of Tarnowo Podgórne, where the centre is manent employees at the centre near located. “The record-breaking invest- Poznań. The company’s EU real estate ment carries with it plans for improving director Raimund Paetzmann put this the road infrastructure and making the number into perspective by equating it surrounding area a much more attrac- to 40 full buses of employees arriving tive place for other companies to invest. at the centre every day. Besides wareThe deal also has obvious benefits for house workers, there will be a need for the local budget, which we hope to uti- technicians, HR professionals, managelise in a way that will have a very posi- ment, and other specialists. Paetzmann tive effect on local residents.” also said that there will be opportunities Piotr Florek, the voivode (local exec- for lower-level employees to advance utive) of the Wielkopolska voivodship within the company, as was the case was similarly happy with the decision. with Polish workers at Amazon centres

in the UK several years ago. A similar Amazon operates in many countries number of people will be employed and they can compare them. They say at the Wrocław location. In addition that they really appreciate Poland and to permanent employees, the holi- Polish people. They also say that things day season will see an increase in the have gone smoothly for them here. number of employees to about 3,000 I can feel a big shift in this country in both centres. in the last few years. Amazon is kind Interestingly, Voivode Florek men- of a symbol of that. tioned that Amazon may be taking a risk with seeking to employ Poles from A shift in what way? his region, taking into account its curIt used to be Western Europe and rent labour statistics. “This decision is Eastern Europe. Italy and Spain were in risky,” he said. “We have low unemploy- the West and Poland was in the East. ment and many specialists.” His words Now it’s “core” Europe and the rest of may have been intended to stymie criti- Europe. Core is Germany, the UK and cism from within Poland that Amazon’s Poland. That’s what I feel. I think that entrance into the country is based solely what helped Poland was the crisis. on the potential for cheap and readily A slowdown shows who’s performing, available labour. Protests about work- and it differentiated Poland from the ing conditions in Amazon took place in rest of Europe. And Poland can improve. its German centres last year during the Just imagine how it could be if the councritical month of December. If the he try had a better road and rail system. is right, however, Amazon will have to OK, it has got better, especially because compete hard for employees in Poland. of Euro 2012, but it would be another But regardless of how Amazon con- huge boost. Especially important is the ducts itself once it begins its operations, rail system. The distances between citthe construction of the distribution ies are perfect for rail, not so much for centres is considered an important flying – they’re not far enough apart. development not just for Poland, but Poland and the Polish economy have for the entire region of Central and done well without a good transport Eastern Europe. According to Panattoni system. Just think what we could do Europe, the cost of each of the facili- when we have a good one. Our colties amounts to about €65m. Their con- leagues in the US say that Poland struction is being completed by Polish is just like another state, compared subcontractors. to other European countries. That’s why Americans are so excited about Poland.

What the country now needs is a more GLOBAL REACH developed white-collar workforce in the cities. London has it, Frankfurt has Countries in which Amazon has, or will it, other major European cities have it. soon have, fulfilment centres (warehouses): It’s developing in Poland. Then some big Canada, China, Czech Republic, France, Germany, India, Italy, Japan, Poland, Spain, companies, for example from the US, United Kingdom, United States might consider moving their European headquarters to Poland. Panattoni now runs Europe from Poland.

Two to three years ago Poland’s warehouse sector seemed to be Poland Today sat down with Robert in the doldrums. Things look a Dobrzycki, managing partner at Panat­ bit different now. How do you see toni Europe, to discuss the impact and prospects for the sector here? potential of Amazon’s cooperation with Panattoni in building the record-breaking facilities in Poland.

Richard Stephens: Is the fact that Amazon is now in Poland significant?

I see four positive things: a lower cost base than in Western Europe, e-commerce, Poland’s location in the centre of Europe and the work ethic of the Polish workforce.

Robert Dobrzycki: It’s a game- Has the arrival of e-commerce changer for Poland, not just for really come as such a surprise?

Panattoni. Amazon is an icon of e-com- I mean, couldn’t you see it coming? merce, a global leader, and it has come It was always on the horizon, but to Poland, employing Polish people. no-one thought it would come so fast.

Others could follow them. I think Poland The great thing is that Poland as a counwill be getting more of this type of busi- try is not so developed in e-commerce. ness, because e-commerce is huge, At the moment it’s more that we’re globally speaking. We heard all about serving Western Europe. When the it from the US and now it’s in Poland, ­domestic e-commerce market develops which is of course putting retail devel- according to its potential, Amazon and opers under pressure. For warehouse others could move in further. There’s developers in Poland it’s a great com- huge potential here. We’re only at the bination of factors. Another thing is that very beginning of it.

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special focus on real estate

‘It’s a gamechanger for Poland.

Amazon is an icon of e-commerce, a global leader, and it has come to Poland.

Robert Dobrzycki

oversees Panattoni’s operations in Central and Western Europe.

Panattoni Europe

is a partner of Poland Today’s Special Focus on Real Estate.

SPECIAL FOCUS ON REAL ESTATE

High-street hangup Warsaw greatly needs a strategy for the development of high-street retail

Special focus on real estate

Warsaw has the potential needed

High streets

for the development of a strong high- – high emotions: Paweł Dębowski street retail property market, but (left), a partner at the it has to come up with a proper strat- Dentons law firm and egy to give that development a real Maciej Zajdel, manboost, said participants in a recent aging director of IVG Poland, bemoan the debate in the Polish capital. While there opportunities for is plenty of tenant and investor interest high-street retail at in high-street units in the city, several a conference on the unresolved problems continue to hinder subject in Warsaw in January. the proper development of the sector of in Poland’s capital, said participants. station area, which is expected to soon Mall competition gain in significance due to the construcAgnieszka Winkler, a senior analyst tion of the second Warsaw subway line. for research and consultancy services at Colliers International, said Bigger is better that for the time being high streets The lack of a proper high-street prodin Warsaw are perceived as less attrac- uct is a problem for potential investive than shopping centres by many tors. Maciej Zajdel, managing director potential investors. Varsovians gener- of IVG Poland, said that his company ally prefer to shop in shopping centres has been looking for high-street assets as, unlike the high streets, they allow in Warsaw for at least five years now, them to find almost everything they need but has so far failed to find the product in one place and therefore save time. it needs. Zajdel stressed that the existAmong the factors that discourage ing high-street retail units in the shoppers from visiting high streets Polish capital are usually too small. in Warsaw are the limited accessibility Many retail chains would like to open of those streets by car and the short- their flagship stores on a high street age of parking spaces nearby, Winkler in Warsaw but often cannot find a sufsaid. ficiently large piece of property that Also, the high streets in Warsaw would meet their expectations. feature fewer stores and brands Meanwhile, the experience than the shopping centres in the city, of the other European capitals shows and potential buyers often see the that high streets need to feature at least stores in them as too dispersed and several flagship stores, comprising from difficult to find. According to Winkler, 1,500 sqm to 5,000 sqm of space that the success of Warsaw high streets will is evenly distributed across three to five require reorganizing the property own- floors, Zajdel added. Such stores sucership structure, upgrading the quality cessfully attract visitors. Besides, the of the buildings in question and coming proper functioning of high-street retail up with a coherent lease and manage- requires the existence of at least two ment strategy. She pointed to Regent or three parking lots located at both Street in London as the model to fol- ends of the high streets, Zajdel said. low. The property on that high street Paweł Dębowski, a partner at the is owned and managed by one entity Dentons law firm, pointed out that Louis and the tenants of the retail units there cooperate on issues including the joint organization of marketing events.

Michał Olszewski, deputy mayor of Warsaw, admitted that ownership issues are a major problem when it comes to the development of highstreet retail in the capital. “It is much easier when there is one manager,” he said. Olszewski added that Warsaw City Hall is now working on a strategy for the development of high-street retail in the Dworzec Wileński railway

photo: IVGBW

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Vuitton had long been looking for suitable high-street retail space in the Polish capital before it finally opened its first Polish boutique in the Vitkac department store in downtown Warsaw in June last year.

According to Tomasz Zemła, deputy director at the architecture and urban planning office of Warsaw City Hall, legal restrictions are largely responsible for the shortage of new high-street retail space in Warsaw. The law currently defines all retail facilities whose area exceeds 2,000 sqm as “large-scale retail facilities” and provides for a number of special planning requirements that have to be met in the case of such investments. As a result, all such facilities are often viewed by officials as controversial, with little distinction being made between a regular shopping centre and a downtown department store, Zemła said. by Adam Zdrodowski

Who's on the street?

According to a recent report by Colliers

International, there are currently approximately 400 high-street retail units in the five major prestigious locations in downtown Warsaw – ul. Nowy Świat, Plac Trzech Krzyży, ul. Chmielna, ul. Marszałkowska and ul. Mokotowska. Prime monthly rents for retail space in high-street locations in Warsaw range from €80 to €95 per sqm, while the vacancy rate in that sector currently stands at 7%, the study said. Most of the tenants already present in the high-street locations in Warsaw represent the restaurant (25%), fashion (15%), and services (9%) sectors, according to the report.

‘Among factors that discourage shoppers from visiting high streets in Warsaw are limited accessibility and the shortage of parking spaces.’

EVENT rEViEw As part of our mission to bring Poland to the world and the world to Poland, Poland Today initiates, organises and grants media patronage to conferences that we believe help us achieve that goal. In this section, we provide a round-up of the conferences we have been a part of, with a view to our providing an international perspective on Poland’s story.

In this issue, we review conferences that examined opportunities and trends in three cities: Lublin, Łódź and Sopot. All have something interesting to offer.

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EVENT rEViEw

POWER BREAKFAST

Sopot coming out of its summer shell Officials and tourism industry players are pushing to make the city a year-round travel destination. see page 82

cOnFEREncE

Łódź r(evital)ising Poland’s former industrial powerhouse is looking to build a sustainable future. see page 84

cOnFEREncE

Gateway Lublin Sopot is a wellestablished destination for summer fun.

But the city needs to do more to attract visitors throughout the rest of the year.

The city has already begun organising events in the offseason. Transport links are improving, too. But some say it still needs to work on increasing its name recognition among foreigners. see page 82

Lublin is improving

its transport links and investor interest in Poland’s largest eastern city is growing as a result. The city is an emerging BPO hub, with low labour costs and a well-educated population. Also, the city's historic downtown area will soon receive a large, modern shopping and entertainment centre. see page 86

Improved infrastructure is boosting Poland’s largest eastern city. see page 86

Allan Saunderson,

UPcOMInG EVEnTS :

9 March:

26 March:

managing editor of Property Investor Europe (PIE), Poland Today’s partner for the CEE Real Estate Summit in Warsaw on 25-26 June, writes on Lublin.

Executive Breakfast: Outsourcing in Bydgoszcz (in Warsaw)

3rd Logistics Conference in Gliwice: Hub Silesia, Gold Hotel Silvia, Gliwice

3 April:

Primetime Warsaw II, Conference Centre Muranów (Museum of the History of the Polish Jews)

April:

15-16 May:

25-26 June:

Outsourcing in Bydgoszcz conference

Plugging in: Poland Home Appliances (AGD) Conference, Piekary Śląskie

28 May:

Poland Transformed, Endorfina Foksal, Warsaw

4 June:

Green Light For Outsourcing conference, Opole

Poland & CEE Real Estate Summit (with Property Investor Europe), Hotel Bristol, Warsaw

June:

September:

October:

December:

November:

December: Poland Transformed Awards Gala, SOHO Factory

Primetime Kraków

June:

Hotel Conference, Warsaw

Primetime Tri-City, Grand Hotel, Sofitel Grand Sopot

Primetime Poznań Primetime Wrocław

Primetime Katowice

Piotr Narel writes on Sopot and Łódź.

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EVENT rEViEw

POWER BREAKFAST

Sopot coming out of its summer shell

photo: Mirosław Pieślak (Forum), Łukasz Dejnarowicz (Forum), Konrad Konstantynowicz

Officials and tourism industry players are pushing to make the city a year-round travel destination

Sopot,

in northern Poland, is a popular destination among Poles for summer vacations. Now the city is hoping to attract visitors all year round, with events and conferences.

It also wants to boost its image abroad.

When most Poles think of the northern Baltic Sea resort town of Sopot, it is usually as a destination for summer vacations, and little else. Hopefully however, such perceptions will soon change, with the city’s officials and its tourism industry working hard to ensure that Sopot becomes a desirable destination year round. One initiative is for the city and its residents to become more engaged with its close Russian neighbours in Kaliningrad, a city which is over twice as close to Sopot as Warsaw. In November, Sopot Mayor Jacek Karnowski and other representatives of the city’s tourism industry travelled to Kaliningrad to promote the Polish city. Mayor Karnowski expressed hope that cooperation between the two cities would extend beyond tourism so that Kaliningrad businesses could potentially hold seminars, conferences, and meetings in Sopot. Kaliningrad residents frequently make the two-and-a-half hour drive to Sopot to shop, attend events, go to spas, and, depending on the season, go yachting or skiing. For their part, Sopot officials recently arranged for tickets to the city’s Ergo Arena to be available for direct purchase in Kaliningrad after

market research revealed that consum- door, which is better known as the birthers in the Russian exclave were sceptical place of Poland’s Solidarity movement. about travelling to Poland on the basis of Even then, people don’t always know that Gdańsk boasts an international airport. tickets purchased online.

Regardless of who you ask, one obvious Seducing the Scandinavians benefit of attracting Scandinavian tourSopot has stiff competition from other ists to Sopot is that they are far less likely tourist destinations in the West, but it is to be discouraged by Sopot’s weather. popular among Scandinavians, who live The weather-driven off-season slowdown relatively close to the Polish city but in is “definitely” the city’s biggest challenge, countries which are far more expensive. said Marcin Kulwas, general manager of These tourists are attracted by Sopot’s PTH Kąpielsko Morskie Sopot, the comnightlife as well as some of the lowest pany that oversees the city’s pier. Kulwas alcohol prices in the European Union. sees promise in drawing more tourists Karol Brześkiewicz, sales specialist at from Kaliningrad, as well as in potentially Sheraton Hotels & Resorts in Sopot said drawing pensioners who appreciate the that “Sopot is definitely a recognisable lack of crowds during the off-season. name for Scandinavians.” But Agnieszka Gad, group and leisure account director Dawid Wilda, the CEO of the Sopot for Poland at Starwood Hotels & Resorts, Tourism Association, said that despite pointed out that the group’s hotels in the weather, there were opportunities in Warsaw, Kraków, and Poznań all perform extending the cultural and sports offer for Sopot in off months. Indeed, the city better than the Sheraton in Sopot. will be hosting the IAAF World Indoor According to her, one of the reasons Championships in light athletics in early for this is that few foreigners have ever March. At a time when there are usually heard of the city. When enticing foreign- few tourists in the city, 1,500 athletes ers to visit Sopot, Gad says that she usu- from 160 different countries will travel to ally has to mention Gdańsk, the city next Sopot to compete in Ergo Arena in front

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The Bristol, one of Warsaw's premiere hotels, was the location of the Sopot Power Breakfast in February.

Sport in Sopot: The IAAF World Indoor Championships will be held in Sopot on 7-9 March. The city hopes the event will pull more off season tourists and boost its name recognition.

of 8,000 spectators in an event which will be broadcast to 140 million viewers in 87 countries. If the event proves to be successful, it will have killed two birds with one stone. Not only will Sopot receive a boost during its usual off-season, but the event may go far in alleviating the challenge of Sopot’s low name recognition abroad.

general manager of the Grand Sopot hotel, said that he was “extremely satisfied” with the efforts of Sopot City Hall so far, and appreciated that it was “thinking outside the box” in emphasizing its cultural and recreational offer, rather than just summer seaside tourism. This appreciation was widespread at a conference on Sopot’s development potential held in Warsaw on 6 February. Promises of shorter travel times, increased development of Sopot’s image, and continued attempts at establishing Sopot on the international stage seemed to be well-received by most of Sopot’s tourism industry.

Trouble with transport There is no doubt, however, that the city’s location is another challenge.

Michał Drelich and Jan Szczeplek from Sport Evolution, organisers of the 2014 Herbalife Triathlon in neighbouring Gdynia, said that when it comes to tak- Besides this, however, Sopot also seems ing part in an event such as the one they to have an advantage difficult to quantify will hold in August, athletes must almost with statistics. Those who have visited the certainly drive in order to transport all of city speak of the experience with palpathe gear they require. Current estimates ble excitement, and of the tendency for of a 3.5-hour drive time between Warsaw the city’s charms to stick. Sopot has a way and Sopot are optimistic to say the least. of creating a personal connection in the People who drive the route often say that minds of its visitors, leading its enthusiit usually takes closer to 4.5 hours. That asts to speak of a certain “je ne sais quoi”. leaves much to be desired, though the In the words of TVN24 presenter Igor last section of freeway between Warsaw Sokołowski, who moderated the conferand Sopot is due to be completed by April. ence at the Sopot conference in Warsaw, Despite the challenges, Gregory Millon, “Sopot just works”. by Piotr Narel

Sopot Attractions: The beach on Gdańsk Bay, a great place to relax in the summertime The Sopot Pier, the longest wooden pier in Europe, 450 metres from the edge of the shore, 650 metres total The Little Crooked House

(Krzywy Domek), an amusingly shaped building 4,000 sqm in size, part of a shopping centre

The Grand Hotel, Sopot’s most famous hotel, built in 1927 and refurbished in 20062007. It has hosted many international politicians and celebrities The Forest Opera, a large, open-air amphitheatre with a capacity of 4,400 seats. The orchestra pit can contain up to 110 musicians The “inhalation mushroom”, a fountain of bromide spring water. The town has many health spas Ergo Arena, opened in 2010, the arena has a capacity of up to 15,000 people. The boundary between the cities of Sopot and Gdańsk runs through the very middle of the arena Over 250 restaurants, pubs and clubs – Sopot’s nightlife is outstanding

Mayor Jacek Karnowski of Sopot

(with microphone) hopes to attract businesses, and not just tourists, from the nearby Russian exclave of Kaliningrad.

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cOnFEREncE

Łódź r(evital)ising

Poland’s former industrial powerhouse is looking to build a sustainable and modern future

photo: Michał Tuliński (Forum)

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The city of Łódź lost its status as a tex- Łódź’s pre-war industrial history, and tile hub for the Soviet bloc countries nothing characterises these contempowith Poland’s democratic transforma- rary attempts at revitalising Łódź’s image tion. Since then, wealth and people have more than Manufaktura. The former steadily trickled out of Łódź, reducing the industrial complex is an ideal relic of the “Polish Manchester” to a shadow of its for- city’s booming manufacturing past, when mer self. Luckily for Łódź, recent efforts wealthy textile magnates, such as the at revitalisation have been successful and complex’s original owner, controlled most the city’s many supporters seem eager to of the city’s factories. Today Manufaktura, ensure that Łódź is prepared for future which means “manufacturing plant” sustainable development. in English, is a shopping, arts and leisure centre located in the city’s downtown.

Historical focus The centre allows visitors to experience Recent Łódź revitalisation projects have some of Łódź’s past even while heading to tended to address the city’s pre-war era one of the centre’s cinemas, bowling alleys, and history. Though the city survived the or restaurants. It is the largest such centre Nazi occupation during World War II in Poland, and one of the largest in Europe. relatively intact, Łódź merely exchanged It is simultaneously a symbol of pride for the swift wartime brutality of the Nazis Łódź and an example of the city’s efforts for the tedious postwar incompetence to blend its past with its present. of the communist system. However successful Łódź’s post-war textile industry The Manufaktura centre includes the may have been, the communist era was Andel’s Hotel, the first four-star hotel severely marred by general discontent. located in the city and one of the top In Łódź, this was evidenced in widespread hotels in Poland. A testament to the city’s hunger demonstrations in 1981. determination to blend old and new to create something distinct, the hotel City officials have therefore focused their was built with the philosophy that hisrevitalisation efforts on emphasising toric aspects should be preserved while

adding modern elements. Everything that appears old is part of the original structure around which the hotel was built.

But far from being a full-blown blast from the past, the hotel boasts such modern elements as a rooftop swimming pool overlooking the city.

Higher profile One of the most important benefits of the recent Łódź revitalisation efforts is that they have raised Łódź’s profile to a global level. Prior to the construction of the Andel’s Hotel, Łódź wouldn’t have had the facilities needed to host world leaders such as Polish-born Israeli President Shimon Peres in 2009. Even with the Andel’s and its presidential suite, the likes of Justin Bieber and Rihanna would never have performed there if the modern Atlas Arena, one of the largest venues in Poland, had not been built.

In line with its large-scale industrial past, Łódź’s revitalisation is based on largescale projects. The latest of these includes the development of a huge new downtown area encompassing some 100 hectares and the reconstruction of the Łódź

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Riding high:

Though Łódź's economy has suffered since its manufacturing industry collapsed, the city ismaking a comeback, with huge investments in revitalisation underway.

Błażej Moder

Piotr Grabowicz,

(right) heads the project to completely revamp the city's downtown area, including the Łódź Fabryczna railway station.

(below) CEO of construction firm MCKB, said that companies building in Łódź are taking sustainability into account.

Fabryczna railway station. The project’s managing director, Błażej Moder, said, “Once the railway renovations are complete, the travel time between Łódź and Warsaw by train will fall from around two hours to less than 70 minutes.”

Really a priority?

Nevertheless, presentations on Łódź’s revitalisation efforts city-wide made little mention of an emphasis on environmentally friendly practices. The Manufaktura centre, for example, boasts BREEAM certification, a good indicator of its “green” credentials. But a presentation on the centre concentrated almost exclusively on its architecture and construction planning, and included little on its sustainable solutions. The presentation on the construction of Łódź’s new downtown area similarly glossed over the issue of sustainable development.

But in the words of Piotr Grabowicz, CEO of construction firm MCKB, the conference simply intended to show that Łódź is interested in including itself in the “very current issue of environmental solutions in the construction industry.” Indeed, the new-found focus on sustainability is a good sign that officials are aware of the modern challenges the city must face. Rafał Schurma, of the Polish Green Building Council, emphasised that the role of his organisation was to “set trends in the construction industry.” Łódź has a considerable need for revitalisation.

If done sustainably, the benefits will last longer than Łódź’s previous glory days.

by Piotr Narel

and its close proximity to Warsaw.

The Andel's Hotel simming pool

in Łódź (below) offers beautiful views of the city.

The facility was the first four-star hotel in the city.

photo: Małgorzata Pluta, MCKB

Having learned from the city’s unwise past reliance on a single industry, officials seem determined to ensure that Łódź’s development is done in a sustainable The city of Łódź’s history isn’t as long manner. A recent conference on sustain- as some other Polish cities, but it is extremely able development held in the Grohman rich. In 1830, the city only had around 4,000 inhabitants. But due to a push to make Factory building within Łódź’s special the city an industrial centre, by 1880, the economic zone, itself a product of a suc- population had increased nearly 20-fold, cessful restoration effort, examined the to 80,000. By the turn of the century, latest trends and standards of sustaina- it was a full-blown industrial powerhouse. ble development. In addition to presen- The economy ebbed and flowed with the World Wars and the centrally planned econtations from the Polish Green Building omy of the communist years, but after WWII Council (PLGBC), the conference the city also became known for its film indusincluded presentations from PwC and try, and boasts a world-renowned film school. a representative from real estate devel- The end of communism meant the end of the oper Qualia Development. All empha- textile industry in the city, and a long, hard, economic downturn. Łódź is now benefiting sised the practical benefits of sustainable from new investments, with its location development. at the intersection of two major highways

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Gateway Lublin

Improved infrastructure is boosting Poland’s largest eastern city

Low labour costs

have made Lublin a hub for business process outsourcing, coming in around 20% lower than inwestern Polish cities.

Class-A office space can be rented for €10-12 per sqm.

Lublin, Poland’s ninth largest city and the The east of Poland has developed more capital of the eastern Lubelskie voivod- slowly than the country’s west, with its ship, has won over €1bn investment in geographical advantage of proximity to recent years, said Mayor Krzysztof Żuk the German economy. By contrast, the at the Gateway to Eastern Markets con- Lublin region is located at the European ference, organized by Poland Today. Union’s eastern border, with little change Improved infrastructure is now putting likely any time soon in the one-party the region on the real estate map, he said. dictatorship in Belarus, and deepening uncertainty over Ukraine’s future. But the “Well over €1bn has been invested up to mayor told the conference that short-term now,” Mayor Żuk told the conference. “In politics of any kind should not be allowed the next one or two years we will have to obscure Lublin’s growing connections more transport structure in place, not to pan-Europe. only a modernisation of the airport but also a motorway from Lublin to Warsaw. The city’s airport already offers direct This is a major stretch and it means that flights to Milan, London, Dublin and thanks to improved accessibility we will Liverpool, and soon will add connecbe increasingly important on the map of tions to Rome and other major European destinations.

Europe.”

Lublin is already providing higher education for 80,000 students – including some 20,000 new arrivals annually – in the humanities, technical disciplines, life sciences and medical professions. Some 2,000 come from Ukraine.

“Lublin is becoming more diversified all the time,” the mayor said. “The city has been assessed very positively by several big reports recently, including one from Deloitte. … Even if cost-effectiveness is always the start of the discussions, we have other assets to put on the table to attract business.” Low relative labour costs are making Lublin a hub for business process outsourcing, coming in around 20% lower than western Polish cities. Class-A office space can be rented

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Krzysztof Żuk, mayor of Lulblin,

(left) said that while investors are often interested in the cost effectiveness his city offers, it has a lot of other qualities – such as a large cadre of university students.

Jacek Wesołowski of Immofinanz,

whose firm is building a large shopping centre in downtown Lublin, next to the city's historic castle.

Ryszard Petru,

(below) a partner at PwC, spoke about the significance of the EU's new budget plan and how it would impact Eastern Poland.

Jan Cienski,

Warsaw correspondent for the Financial Times, took part in the debate.

Plenty of potential In 2013 Lublin received a huge amount of funding infrastructure investment – some 670m zł. A ring road is being constructed, and its airport was opened in December 2012. The city is considered one of Poland’s major cultural and artistic hubs, and boasts several highly regarded institutions of higher education, including the John Paul II Catholic University of Lublin, the Lublin University of Technology, the Medical University of Lublin and the University of Life Sciences in Lublin. There are over 80,000 university students in the city.

for €10-12 per sqm and Lublin also offers open in Q4 this year. Immofinanz CEO a Special Economic Zone for manufactur- Eduard Zehetner told the audience at the opening ceremony, which included Żuk, ing and service firms. general contractor Warbud and the archi“We always welcome inward investors tects Stelmach i Partnerzy: “Lublin is an and vitally, we are able to provide support attractive market for retail trade, with its quickly if they seek a location,” said Mayor 350,000 residents and a catchment area Żuk. “Investors face close to no barriers at with a population of 800,000. The interall if they wish to come to Lublin.” est of potential international, national and local tenants confirms this standing.”

Powering ahead Vienna-based property group Immofinanz Spain’s Inditex, one of the world’s largest is already powering ahead in Lublin. fashion retailers, has already signed for It recently laid the cornerstone for Tarasy space in Tarasy Zamkowe, and will take Zamkowe, a shopping centre close to up a total of over 5,300 sqm with seven of the city’s historic castle, scheduled to be its brands – Zara, Pull & Bear, Massimo developed at a cost of some €95m. The Dutti, Bershka, Stradivarius, Oysho and centre, offering up to 38,000 sqm lease- Zara Home. Mayor Żuk said the city’s able space and 150 shops, is scheduled to aim is to revitalise the neighbourhood

surrounding Lublin Castle and the Old Town. “The realisation of Tarasy Zamkowe fits perfectly with our plans – the centre will be located in a historical area and also expand the retail offering in Lublin. At the same time, the investment will make an important contribution to creating a new road system.”

Adapted from an article

by Allan Saunderson, managing

editor of Property Investor Europe (PIE), the London- and Frankfurt-based publisher of PIE magazine. The piece initially appeared in the PIE daily newsletter. Poland Today & Property Investor Europe are jointly organizing the CEE Real Estate Summit ‘Network Global Capital’ at the Bristol Hotel, Warsaw, on 25-26 June, 2014.

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Poland’s golden winter The 2014 Sochi games were the most successful Winter Olympics in Poland’s history

The 2014 Winter Olympics

in Sochi were an unprecedented success for Poland. Having won only two gold medals between 1924 and 2010, the Poles returned from Sochi with double that number. Poland’s golden cake was also topped with bronze and silver cherries, bringing the total number of medals the country won to six. In all, a record-breaking nine proud Poles stood on the podium.

Justyna Kowalczyk Gold: cross country ladies’ 10km classic

Justyna Kowalczyk, Poland’s star 31-year-old cross-country skier, is no stranger to Polish sports fans. She has now participated in three Winter Olympics, from which she has never returned empty-handed. Her gold medal in Sochi was well-earned.

Though her competition did not give her too many problems, Kowalczyk had to fight with her own body to complete the 10 kilometre course despite a foot fracture. Her injury prevented her from repeating her gold medal performance from Vancouver in the 30km distance.

Zbigniew Bródka Gold: speed skating men’s 1500m

by Piotr Narel

Zbigniew Bródka deals with fire on a day-to-day basis, though he is clearly comfortable on ice as well. The 29-yearold speed-skating firefighter from Łowicz eked out a gold medal victory by 0.003 seconds – or about 4 centimetres – in one of the most exciting finishes from this year’s Olympic games.

His unexpected transformation from a 27th-place finisher four years ago to gold medallist in Sochi surprised many and clearly upset his second-place Dutch rival.

Kamil Stoch Gold: ski jumping men’s normal hill individual Gold: ski jumping men’s large hill individual

photos: Valery Sharifulin (ITAR-TASS), Kyodo (MAXPPP), Michael Dalder (Reuters), Issei Kato (Reuters), Grigory Dukor (Reuters)

The 26-year-old Zakopane native Kamil Stoch won as many Winter Olympic gold medals in Sochi as Poland had previously been able to attain in the games’ previous 86-year history. His two victories were a product of more than 20 years of training, beginning at the age of four. Stoch is only the third person in history to win two gold medals in individual competitions at the same Winter Olympics.

Katarzyna Bachleda-Curuś Natalia Czerwonka Luiza Złotkowska Katarzyna Woźniak Silver: speed skating women’s team pursuit

Katarzyna Bachleda-Curuś, Luiza Złotkowska, and Katarzyna Woźniak skated to silver in the women’s team pursuit final. Natalia Czerwonka offered her support from the sidelines after helping the team qualify in the quarter and semifinals. The team managed to beat out Russia but were considerably behind the untouchable Dutch.

Zbigniew Bródka, Konrad Niedźwiedzki, Jan Szymański Bronze: speed skating men’s team pursuit

Zbigniew Bródka joined teammates Konrad Niedźwiedzki and Jan Szymański to win bronze in the speed skating team pursuit over fourth-place Canada. South Korea’s team effort was good enough for second place but not enough to seriously challenge the speed-skating dominance of the Netherlands.

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BOOKS & ARTS

A lake, a hotel, and a battle for justice A foreigner’s effort to get away from it all put him up against Poland’s post-communist bureaucracy and culture

How does a simple venture to build a hotel on a lakeside plot of land in northern Poland become a battle “for a free press, justice and a place to call home”? John Borrell, an expat from New Zealand and former foreign correspondent, tells the tale in his entertaining new book “The White Lake”.

The story plots his arduous, but eventually triumphant, undertaking to build a small up-market hotel in rural Poland from scratch during the Wild East days of the 1990s. But the account is more than a simple diary recount of construction from first brick to first guest.

In the course of building what would eventually become Kania Lodge, Borrell comes up against shady local structures and networks still steeped in the cumbersome, corrupt and vindictive habits born of communism. He is forced deal with violent and jealous neighbours and a general bemusement mingled with suspicion as to why a foreigner would want to invest so much in what was then a far away and obscure part of the world.

Confronting the dark side

Matthew Day

covers Central Europe for the UK’s The Telegraph, while also writing on Central and Eastern European affairs for The Scotsman.

He has reported on major events such as the 2010 Smolensk disaster and Poland’s recent presidency of the EU. He first came to Central Europe in 1992 as an English and history teacher.

‘Drinking leg-trembling amounts of vodka with local farmers during negotiations over the sale of land is a bridge that few of us have crossed.’

ABOUT THE AUTHOR John Borrell was born in Britain and grew

up in New Zealand. He worked as a foreign correspondent for nearly three decades, covering wars in Africa, the Middle East and Central America. Having reported on the collapse of communism in Eastern Europe, Borrell dropped journalism in 1992 to build a new life in Poland. He and his Polish wife now run the Kania Lodge, near Gdańsk. Borrell has also started three other businesses, including a local newspaper.

Borrell’s love for

the land on a beautiful lake in Poland’s Kaszuby region shines through in his tale of struggle against local corruption and post-communist culture in “The White Lake”.

He also provides readers with a broad overview of Polish history. Perhaps aware that many Westerners, despite Poland’s growing presence in the world, still know very little about the country, Borrell carefully weaves aspects of the Central European country’s past into the narrative. The Holocaust, communism and even the imperial carveup of Poland by the Russian, Prussian and Austrian empires get a mention.

This, along with the singularities of the Polish language and aspects of local culture, all combine to give anybody not well versed in Poland a useful source of knowledge.

Unique obstacles All this sets “The White Lake” apart from other books of a similar ilk. While books So what makes Borrell’s tribulations that place a foreigner in a new land often worth reading about? For one, his obstacles were unique. The daunting dwell on rose-coloured scenes of rural beauty and the quirky but strangely but culturally necessary task of drinkappealing habits of the locals, Borrell’s ing leg-trembling amounts of vodka book confronts the darker side of Poland with local farmers during negotiations in the 1990s, when communist-era netGiven all this, you would understand over the sale of land is a bridge that few works of corrupt officials and their cro- if Borrell had sunk into the sea of cyni- of us have crossed. So too for lugging nies still ruled the roost. cism and negativity that surrounds some buckets of lake water up a hill just to He encounters hostile bureaucrats expatriates in Poland. Talk to them and all wash a baby’s nappies. Borrell had to who frustrate his efforts to build and you hear is a litany of complaints about do that before the lodge was built while then develop a business bringing their adopted country that leaves you he, his wife and infant son were living much-needed investment and jobs to wondering why they stay. in a caravan. a dusty corner of the northern Kaszuby But Borrell, while sometimes clearly But the aspect of the story that area of Poland, not far from Gdańsk. angry, retains a certain objectivity. Perhaps most shines through is Borrell’s clear As the battle continues he realises that this has its roots in his days as a foreign love for his land by a Kaszuby lake. Far he’s up against a network encompass- correspondent, which took him from war from comprising a catalogue of woe, ing local paper-pushers, politicians, zones to hot spots around the world. Bad “The White Lake” is set against a tapespolice and businesses, all of whom have things happen, people commit awful deeds try of one man’s love and commitment taken a dislike to his principled refusal – but a correspondent should always try to a piece of foreign soil, and his deterto play ball and slip a fat envelope to explain the context to the events they mination to build a home for his famconfront. under the table. ily and a business that would provide So in a precise manner underscored both a future and an escape from the As part of the struggle he fights numerous court battles, creates his by the experience gained from living in sapping and at times dangerous life of own newspaper to provide an anti- Poland for decades, Borrell dives into a foreign correspondent.

For Borrell, it is his love for that land corruption voice and is left bloodied by the country’s past to provide the reader an attack by a neighbour jealous of his with a thoughtful analysis of where the which makes his battle worthwhile. efforts and probably in cahoots with corruption and petty envy that haunted It makes for a worthwhile read as well. the ruling cabal. his project came from.

by Matthew Day

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92 HISTORY

It happened in... March Independence, Missouri, 12 March 1999.

Poland joins the North Atlantic Treaty Organization

After being an important member of, and indeed the namesake for, the Warsaw Pact for 45 years, Poland withdrew from the Soviet-led security organisation in 1990, becoming only the second country to do so since Albania in 1968. Following a nerve-racking period of insecurity that served as a testament to the country’s determination to shift its focus from east to west, Poland joined the Western-backed North Atlantic Treaty Organization on 12 March, 1999.

Poland joining NATO is probably the least appreciated of the three landmark anniversaries being celebrated in Poland this year (the other two being 25 years since the first partially free elections and 10 years since EU accession). The signing of the treaty is simply not as glamorous as the grassroots-led political transformation of 1989, nor are its effects as easily visible as the economic boom since European integration in 2004. But the implications of Poland’s NATO membership must not be underestimated.

Though the Warsaw Pact provided Poland with a kind of security, it came at the expense of sovereignty. The invasion of Czechoslovakia in 1968 was a stark reminder of that. Though the invasion may havWe been initiated by the Soviet Union under the auspices of the Warsaw Pact, it involved large numbers of Polish troops and is therefore a stain on Polish, not just Soviet, history.

Continued cooperation with the Soviet Union after Poland’s 1989 transformation was out of the question for Poles, but Moscow didn’t take the break-up well. After their aggressive arrival in 1939, Russian troops far outstayed their welcome – leaving only in 1993, already after the dissolution of the Soviet Union.

For the next few years, Poland had sovereignty – but little security. Joining NATO in 1999 was essential to righting this imbalance, but it also provided Poland with a degree of security that it had never enjoyed before. A common sentiment expressed by foreign policy experts such as presidential advisor Roman Kuźniar is that, since joining NATO, “Poland has been the safest that it has ever been.” In other words, thanks to NATO, sovereignty and security are two concepts in Poland that are no longer in conflict. by Piotr Narel

Poland’s Minister of Foreign Affairs Bronisław Geremek signs the Act of

Accession to NATO as US Secretary of State Madeleine Albright looks on.

Poland saw NATO membership as an assurance of security and as overdue recognition of its rightful place in Europe.

photo: JP (Pool Reuters)

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CONVERSATION

Impressions of Poland Poland Today sits down with foreigners living in Poland with a unique story to tell

‘Learn the language and leave all the stereotypes at home.’ in shops and restaurants was horrible in those days. It’s better now, but there’s still a lot of room for improvement.

What about Poland was unexpected?

I could never remember which was the men’s room, the upside-down triangle or the circle. I guess there’s some logic there, but it took me a while to get used to it. Plus paying to go to the loo.

I always paid happily because I thought it was a hysterical idea.

AN AMERICAN IN POLAND Kehrt Reyher first visited Poland in early

1990 on assignment as a business editor for The Detroit News. After moving to Poland in ­February 1992 and observing the Polish media scene as consultants until late 1993, he and his wife launched VFP Communications, the publisher of Media & Marketing Polska magazine. After selling the firm in 2008, the Reyhers opened a bed-and-breakfast in an 18th-century palace at Nakło, a small village in north-eastern

How closely did your preconceptions of Poland match your first impressions?

Kehrt Reyher

founded a media consulting and publishing company in Poland. He now runs a bed-and-breakfast in the village of Nakło, Silesia.

Well, my wife had prepared me for a pretty grim experience – but I think even she was shocked at what was already happening in early 1990.

The shops were well-stocked – and on the street it was like a big bazaar.

People were selling everything – out of sidewalk stands and out of the boots of their cars – all over the country. There was a buzz like nothing I’d ever seen.

Looking back, have those first impressions been proved right or wrong?

They’ve proved right. One of my strongest impressions was that these folks were traders, deal-makers, which to me meant that the market would take hold at the roots. Of course, the service

Was anything surprisingly familiar?

Not until McDonald’s arrived.

What was the thing that was hardest to adjust to when you first came to Poland?

Smoked eel. Carp. Bigos. Gołąbki.

Actually, I never adjusted to any of those. But my mother-in-law has pampered me since the day I arrived, and still does, only fixing me the things I like. Pierogi ruskie, barszcz z krokietem.

I still have trouble with the mad drivers, and suffer a lot of road rage.

What was the strangest or most memorable experience from your time in Poland?

We first came as consultants on a Polish-American project to start a national daily newspaper. It was a wellfunded thing. The newspaper was never published, but a lot of American contractors and suppliers got rich on the deal (I wasn’t one of them). That was my first lesson about how foreign investment works in the early days of a developing market. From there, we moved to Super Express, which was an underfunded little rag. Grzegorz Lindenberg, who’d moved from Gazeta Wyborcza, was hired to run the thing. I think it had a circulation of about 40,000 until he started a lottery, the main prize being

a small house and a plot of land. The circulation went to about 300,000 overnight. Which to me just proved that a great idea is more valuable than money – and all that American “know-how.”

What Polish thing do you wish they had in your home country, and vice-versa?

I wish we had train travel in the States. I wish Poland had roads like we do in the US.

What are the most striking similarities between Poles and people from the US, and what are the most striking differences?

I’ll answer this in a different way.

For about three years before I left the US, I spent a lot of time around PolishAmericans. Some of them were older, post-war émigrés, and then there were the later waves of defectors.

So in Polonia in the States, there was a generational thing that seemed to colour their outlooks. They were all cantankerous; there was a lot of infighting in the various Pol-Am organizations.

This really prepared me well for being on the ground in their home country!

Of course, the debate at that time was about Poland’s future after ’89. There was a lot of patriotism in all of it, so the differences were just about political orientation and means, rather than ends. But I’ve always been impressed

by Poles’ patriotism. And by their ability to assimilate when they go abroad.

What advice would you give someone from the States coming to live in Poland?

Learn the language and leave all the stereotypes at home.

What advice would you give a Pole going to live in the States?

Think long and hard about doing it. The opportunities here are much greater, and will be for years to come.

In what way has Poland changed you for the better or for the worse?

For the better: My net worth and my main domicile.

What keeps you here now?

I’ve lost my American passport, and the IRS is looking for me.

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